The report has angered Malawians who are currently grappling with a long running fuel crisis. One of the newspapers, the Daily Times said the money given to Zimbabwe was enough for Malawi to buy fuel for three weeks.
Zimbabwe borrowed money from the Malawian government to buy maize in 2007. RBZ owes several local and foreign creditors billions of US dollars.
The debts were accrued during the period when the central bank engaged in quasi fiscal activities ostensibly to bust sanctions imposed on President Robert Mugabe and his inner circle.
According to the Nyasa Times, the Malawian government underwrote the initial US$100 million loan, which was issued by that country’s central bank.
“In June 2007, the government of Malawi through the Reserve Bank of Malawi (RMB) agreed to lend the government of Zimbabwe through the Reserve Bank of Zimbabwe, 100 million United States dollars for the purpose of importing maize from Malawi,” the paper quoted the RMB annual report for the year ended December 2010.
“The Bank considered the recoverability of the loan as being doubtful owing to a number of times RBZ has defaulted on the payment of the principal plus interest, and subsequently impaired the loan as at year-end.”
Malawi’s external debt is also said to be worsening after it rose by 11 percent to US$846 million.
The RBZ had most of its assets auctioned by creditors who were owed money for inputs supplied under its controversial farm mechanisation programme.
It is also in the process of selling its non core assets that include companies to offset some of the debts.
Post published in: Business