China Eximbank provides RMB 539 million government concessional loan for Malawi University of Science and Technology (MUST) Project

On February 18, 2011, China Eximbank signed an RMB 539,047,379 government concessional loan (GCL) agreement for the Malawi University of Science and Technology (MUST) Project. The borrowing terms of the loan are as follows: a 20 year maturity (final maturity date: March 21, 2031), a 5 year grace period (first repayment date: September 21, 2016), and a 2% interest rate. The loan's principal amount outstanding was RMB 341,396,673.36 as of June 2023. As of 2022, the borrower expected to make principal repayments each year worth RMB 35,936,491 until 2031. The project involved the construction of the Malawi University of Science and Technology (MUST) in the district of Thyolo. The university was designed to accommodate 3,000 students. The contractor responsible for project implementation was Anhui Foreign Economic Construction Group Co., Ltd. (AFECC). Project implementation began on April 9, 2011. The project was scheduled for completion in time for the 2013/14 academic year and the official project handover ceremony took place on December 13, 2013. There are some indications that the China Eximbank loan for the Malawi University of Science and Technology (MUST) Project has financially underperformed vis-a-vis the original expectations of the lender. In 2021, Malawi's Minister of Finance announced that ‘in 2020/21 FY, Government [of Malawi] requested temporary debt service suspension from bilateral creditors. This is in line with the Extended Debt Service Suspension Initiative (DSSI). The key feature of the Extended DSSI is that the repayment period of the principal and interest payments falling due between 1st January 2021 to 30th June 2021 will be made in five years with one-year grace period. This entails that in 2021/22 FY, the suspended debt service will be within the grace period.’ Then, in November 2022, the World Bank and the IMF judged the Government of Malawi’s external debt and overall public debt to be ‘in distress’—a downgrade from the previous World Bank-IMF Debt Sustainability Analysis (DSA). In July 2023 correspondence with AidData’s Executive Director, the Government of Malawi revealed that it was in negotiations with China Eximbank about rescheduling all of their loans with amounts outstanding. The Government of Malawi proposed principal payments worth RMB 61 million and interest payments worth RMB 26 million in 2023, interest payments worth RMB 26 million and principal payment deferrals in 2024 and 2025, RMB 50 million in principal and interest payments in 2026, RMB 90 million in principal and interest payments in 2027, RMB 89 million in principal and interest payments in 2028, RMB 88 million in principal and interest payments in 2029, RMB 87 million in principal and interest payments in 2030, RMB 86 million in principal and interest payments in 2031, and RMB 85 million in principal and interest payments in 2032. China Eximbank proposed principal payments worth RMB 61 million and interest payments worth RMB 26 million in 2023, interest payments worth RMB 26 million and principal payment deferrals in 2024 and 2025, RMB 148 million in principal and interest payments in 2026, RMB 299 million in principal and interest payments in 2027, RMB 294 million in principal and interest payments in 2028, RMB 228 million in principal and interest payments in 2029, RMB 121 million in principal and interest payments in 2030, RMB 101 million in principal and interest payments in 2031, and RMB 82 million in principal and interest payments in 2032. As of July 2023, a debt rescheduling deal had not yet been reached by the parties.

Additional details

1. The Government of Malawi loan instrument ID number is 2011002. 2. In July 2023, the Government of Malawi's Ministry of Finance informed AidData that China Eximbank ultimately did not approve its request from temporary debt service suspension via DSSI. On this point, also see https://datatopics.worldbank.org/dssitables/deferrals/annual/MWI

Number of official sources

15

Number of total sources

23