Minister of Finance Sosten Gwengwe has said prospects are high on the rescheduling of debt which the country owes Exim Bank of China.
In an exclusive interview on the sidelines of the on-going China- Africa Economic and Trade Expo (Ceate), Gwengwe said the Chinese bank has offered a three-year moratorium and three years repayment period.
He said the option would, in the medium term, help stabilise the country’s liquidity although it does not fully restore Malawi’s debt sustainability.
“We have asked for an elongated extension of the repayment period from three to 15 years.
“Debt cancellation is the best option but it needs common approach by all creditors. It takes time to reach a consensus but countries including Malawi are pushing,” Gwengwe said.
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He said the Exim Bank of China has assured it will respond to Malawi’s request “in the quickest possible time.”
Gwengwe said while debt relief will free up the much needed liquidity, the country also anticipates a nod on the International Monetary Fund’s Extended Credit Facility (ECF) by October.
“ECF is expected in October everything being equal. Restoring debt sustainability on the medium-term is the primary objective of the ECF Programme. Restructuring is a key part in us getting ECF,” he said.
Commenting of effort to ensure fiscal prudence, Gwengwe said Treasury is working tirelessly in managing government spending to stabilise inflation.
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He said the Treasury is working with the monetary authorities towards containing prevailing pressure.
“We work hand in hand in money growth. Efforts to grow the revenue have been enhanced but cutting spending is the key,” he said.
Commenting in an interview yesterday, Malawi University of Business and Applied Sciences-based economist Betchani Tchereni said the idea is to create breathing space to create a productive environment.
“[The last] two budget statements emphasised debt restructuring as a way of relief for us to find our fit.
“Restructuring is a way of debt relief and if it goes through to the extent that we push in terms of the period, installments and other things, we will then be able to have some resources which should push us to organise our productive capacity,” Tchereni said.
President Lazarus Chakwera who is leading Malawi delegation in China has since called on Chinese government to continue working with African countries to maximise the continent’s full potential.
He further called for deepening of the partnerships between China and Africa.
“While the benefits of the economic partnership between China and Africa have been visible and incremental, the time has come for us to imagine a new kind of partnership whose economic dividends are exponential,” he said.
About 15 exhibitors from Malawi are displaying their products in the areas of tourism, agro-processing, mining, arts, crafts and agriculture.
