China on Friday announced it had conceded to Mozambique a partial debt forgiveness of 244.6 million yuan (£27.1M), which is the equivalent of about 2% of the debt that is owed to the Asian country.
The pardon comes as a means to help combat covid-19, the Chinese official explained, during the signing of the agreement on Friday, in Maputo, between the Chinese Ambassador to Mozambique, Wang Hejum, and the Minister of Foreign Affairs and Cooperation of Mozambique, Verónica Macamo.
“The Chinese (…) dispenses with obligations of the Mozambican side in terms of the amortization of three loans, without interest,” said Chinese ambassador Wang Hejum, without giving further details, in a statement to the press after the signature in which there was no room for questions.
“China is a friendly country that has always known how to be at the side of Mozambique in difficult times and also at the best moments. Therefore, this gesture from China does not surprise us. This sister country has always been consistent in its support for Mozambique ”, declared the Minister of Foreign Affairs and Cooperation of Mozambique, moments after the signing of the agreement.
In addition to partial debt forgiveness, the parties also signed an agreement that the Chinese government will pay 150 million yuan (£16,6M) for social and economic projects in Mozambique.
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According to the most recent data released by the Mozambican Minister of Economy and Finance in parliament, in November, the debt with China is around US$2B, or about 16% of the total Mozambican public debt of US$12.3B.
According to those data, a majority portion of the debt to China, amounting to US$1,97B, is due to the Chinese Exim Bank and was used mainly for the construction of roads and bridges, including the Maputo Ring Road, the suspension bridge over Maputo Bay and the roads to the south.