Chakwera appeals for debt clemency

President Lazarus Chakwera has asked the world’s major lenders to relieve Least Developed Countries (LDC’s) of their debts which he says are ‘shackling’ them.

Speaking when he addressed the 77th Session of the United Nations General Assembly (Unga) in New York yesterday, he said the LDCs unsustainable debt levels is a form of slavery which must be put to an end.

In his speech made available to The Nation by the State House press office, Chakwera said even loans that were given and received in good faith have become unsustainable in the recent and current climate relentless and unforeseen external shocks.

He said: “Let this be the beginning of breaking the chains holding vulnerable countries back, not the end, because when we say that we are leaving no one behind, this is one way to put our money where our mouth is.

“Let me hasten to add that as President of a country that stands to benefit from debt-relief measures, I do not regard my country as entitled to such, and am in fact fully committed to be held accountable for the responsible use of these life jackets.”

The President’s appeal on the debt clemency comes a month after China indicated that it will write off Malawi’s K5.5 billion non-interest rate loan.

The move was seen as part of China’s response and commitment to foster stronger economic ties with the African continent.

During the Forum on China-Africa Cooperation held virtually last month, Chinese Foreign Minister Wang Yi said the Chinese Government has waived 23 interest-free loans for 17 African countries.

While calling on other lenders to emulate China’s example, Chakwera yesterday said at the same time, he recognises that countries with unsustainable debt levels must prove of such assistance by using it cushion citizens against numerous challenges.

“There must be in fact no member state in our midst that is beyond scrutiny or exempt from accountability.

“For that to become a reality, US [United States] President [Joe] Biden’s call for this UN [United Nations] family to defend the rights of smaller nations as equals of larger ones must not only be applauded. It must be uploaded,” he said.

The President further said African member States of the UN expect that such sentiments would be taken into consideration and that it is tabled and settled at the United Nations Security Council.

He further said expectations of LDCs are that the UN is a reformed entity which practices the equality it preaches, not constantly polarised by nuclear powers stuck in cold war mindsets and that uses its multilateral muscle to give equal attention.

China’s decision to relieve Malawi of its obligation to repay the external debt, which has rapidly risen in recent years, eased the country its debt distress.

According to the 2022/23 financial statement published by Treasury, total public debt stock as at December 31 2021 stood at K5.8 trillion, or 56.8 percent of the rebased gross domestic product (GDP), as compared to a stock of K5.45 trillion or 58.8 percent of GDP in June 2021.

The figures show that  as of December 2021, the People’s Republic of China, Malawi’ s fourth top external creditor, was owed $239.22 million (about K244.36 billion) a jump from $233.74 million (about K238.76 billion)  recorded in June 2021.

The waiver thus means that Malawi would pay K5.5 billion less of the K244.36 billion to China, which accounted for 6.96 percent of Malawi’s public debt stock as at December 2021.

Minister of Finance Sosten Gwengwe told The Nation of August 25 2022 that the debt relief would help Malawi address immediate needs, specifically budget financing.