Ministry of Finance says it will apply for a temporary suspension of debt-service payments following the extension of the facility.
This is a reversal from an earlier statement that Treasury had shelved plans to request for debt repayment suspension with international lenders, arguing that the review of the debt suspension proved “the economy could pay dearly” if debt repayment was suspended than servicing it despite the economic hiccups.
In a brief interview, Ministry of Finance spokesperson Williams Banda said: “Malawi will be applying for the facility and it will depend on the terms offered.”
Last week, World Bank announced that the Debt Service Suspension Initiative, which has delivered about $5 billion in debt relief to more than 40 eligible countries originally set to end on December 31 2020 has been extended to June this year.
In all, 73 countries are eligible for a temporary suspension of debt-service payments owed to their official bilateral creditors in the face of the Covid-19 pandemic, which has dealt a major blow to the world’s poorest countries, causing a recession that could push more than 100 million people into extreme poverty.
World Bank figures indicate that between July and December 2020, Malawi spent about $149 million (K114 billion) to service debt to its multilateral and bilateral creditors, including African Development Bank, World Bank, China, Belgium, India and Kuwait.
In the 2020/21 National Budget, government allocated about K300 billion for debt interest payments.
Malawi remains heavily indebted with public debt stock pegged at K4.1 trillion as of June 2020.