You are here

Debt treatment -
January 25, 2001

Supporting agreements with the international institutions

Program with the IMF under the PRGF approved on December 21, 2000

Download the IMF report : letter of intent

Total external debt of the country

$2 600 million as of December 31, 1999

$333 million of which being due to Paris Club as of June 30, 1999

Amounts treated

$66 million of which $19 million being canceled, of which $47 million being rescheduled

Accorded treatment

Restructuring of the public external debt. Given its strong track-record of reforms as well as the burden of its external indebtedness, Malawi reached on December 21, 2000 its decision point under the enhanced HIPC Initiative and was granted an arrangement under the Poverty Reduction and Growth Facility with the International Monetary Fund.

Categories of debt treated

Treatment of maturities falling due from December 01, 2000 up to September 01, 2006

Repayment profile

Treatment under Cologne terms (cancellation rate of 90%)

  • repayment of non ODA credits over 23 years, with 6 years of grace, after cancellation to a rate of 90%
  • repayment of ODA credits over 40 years with 16 years of grace

repayment profile

Specific provisions

Possibility to conduct debt swaps

On a voluntary and bilateral basis, the Government of each creditor country or its appropriate institutions may sell or exchange, in the framework of debt for nature, debt for aid, debt for equity swaps or other local currency debt swaps: (i) all ODA loans ; (ii) the amounts of other outstanding credits, loans and consolidations, up to 20% of the amounts of outstanding credits as of December 31, 2000 or up to an amount of SDR 5 million, whichever is higher. Participating creditor countries and the Government of the Republic of Malawi will inform semi-annually the Secretariat of the Paris Club, who will inform other creditors, of the debt swaps agreements they have implemented. All elements necessary to evaluate the operation, its impact on the Republic of Malawi's economy and on the evolution of creditor's exposure will be transmitted to the Secretariat including : its nature and purpose ; the parties to the debt swap ; the amount, type and value of the debt treated ; the price of sale to investors and the expense of the Republic of Malawi.

Given the decision by Paris Club Creditors to contribute to the exceptional assistance in favour of the Republic of Malawi under the enhanced Debt Initiative for the Heavily Indebted Poor Countries, the Participating Creditor Countries declare their readiness in principle to hold at completion point a meeting designed to examine the question of the Republic of Malawi's outstanding debt stock and to make the necessary effort, in favor of the Republic of Malawi to reach the objective of its debt sustainability in the context of an equitable burden sharing among creditors, provided that :

- the Republic of Malawi maintains satisfactory relations with participating Creditor Countries, fully implements all the agreements signed with them and maintains a sound adjustment track record ;

- the Boards of the International Monetary Fund and the International Development Association decide that the Republic of Malawi has reached its completion point under the enhanced Debt Initiative for the Heavily Indebted Poor Countries.


Pullback clause

The Participating Creditor Countries will review the implementation of the conditions regarding the conditions for the entry into force of the phases. hereabove. If in light of the decisions taken by the Board of the International Monetary Fund, the Participating Creditor Countries determine that these conditions were not fulfilled for the implementation of the Agreed Minute they may declare part or all of the provisions set forth in the Agreement null and void.



  • First phase : From December 01, 2000 up to December 31, 2001, implemented at the signature of the agreement
  • Second phase : From January 01, 2002 up to December 31, 2002, implemented on November 17, 2003
  • Third phase : From January 01, 2003 up to September 01, 2006, implemented on November 17, 2003

De minimis threshold of 100 000 SDR

Payment of non-consolidated amounts before April 30, 2001

Comparability of treatment provision

In order to secure comparable treatment of its debt due to all its external public or private creditors, the Government of the Republic of Malawi commits itself to seek promptly from all its external creditors debt reduction and reorganization arrangements on terms comparable in net present value to those set forth in the Agreed Minute dated January 25, 2001 for credits of comparable maturity. Comparability of treatment for debt reduction in net present value is assessed not only on the basis of the reduction in the face value of the debt but also on the terms of repayment of the debts not cancelled.

Consequently, the Government of the Republic of Malawi commits itself to accord all categories of creditors -and in particular creditor countries not participating in the Agreed Minute, commercial banks and suppliers- a treatment not more favorable than that accorded to the Participating Creditor Countries.

For the purpose of the comparison between the arrangements concluded by the Government of the Republic of Malawi with its creditor countries not listed in the Agreed Minute on the one hand, and arrangements with the Participating Creditor Countries on the other hand, all relevant elements will be taken into account, including the exposure of the creditor countries not listed in the Agreed Minute, the level of cash payments received by those creditor countries from the Government of the Republic of Malawi as compared to their share in the Republic of Malawi's external debt, the nature and characteristics of all treatment applied, including debt buy backs, and all characteristics of the reorganized claims and in particular their repayment terms whatever forms they take and in general the financial relations between the Government of the Republic of Malawi and the creditor countries not listed in the Agreed Minute.

Cut-off date

January 01, 1997

Organisation of the session

The meeting was chaired by Mr. Bruno BEZARD, Vice Chairman of the Paris Club.

The head of the debtor country's delegation was Dr Mathews A.P. CHIKAONKA, Minister of Finance, Economy and Plan.


Files attached

Zircon - This is a contributing Drupal Theme
Design by WeebPal.