Anti-Bakili Muluzi / MALAWI POLITICS TODAY

France to cancel Malawi’s K1bn debt

by Ephraim Munthali, 09 March 2007 - 04:46:37

France will this year cancel a US$9 million (K1.26 billion) debt Malawi owes that country, the French Ambassador to Malawi and Zambia Francis Saudubray said on Wednesday. The ambassador made the disclosure on the sidelines of a ceremony to honour two local language lecturers—Professor Boston Soko of Mzuzu University and Dr. Allan Lipenga of Chancellor College—for their outstanding work in promoting African culture and languages. “France is impressed with how the Bingu wa Mutharika administration has been managing the economy. The country’s macro-economic conditions have improved considerably, hence our decision to cancel the debt,” said the Lusaka-based envoy. Saudubray, who represents France in Zambia and Malawi, said his government is discussing with Malawian authorities on how to efficiently and effectively utilise the freed resources for the benefit of the poor and the economy in general. “On our part, we would like to see most of these resources going into the mining sector and the conservation of the environment,” he said. Saudubray said Malawi and France will sign an agreement between June and September this year to formalise the debt relief.. Finance Minister Goodall Gondwe and Secretary to the Treasury Radson Mwadiwa could not be reached for comment on the development. France’s announcement comes on the back of decisions by the International Monetary Fund (IMF) and the World Bank at the end of last August to cancel Malawi’s debts after the country became the 20th to reach the completion point under the Heavily Indebted Poor Countries (Hipc) debt relief programme. In October last year, government creditors in the Paris Club followed suit to forgive Malawi’s foreign debt which, before the multilateral cancellation, stood at around US$3 billion (about K420 billion). The debt cancellation is poised to leave Malawi with annual debt service savings of over US$100 million (about K14 billion) over the next 20 years. This translates to 1.7 months of additional import cover. Thus, apart from helping to boost donor and investor perceptions, the write-off is tipped to improve the country’s balance of payment position which is always in the red largely because its trade account has traditionally maintained a deficit.