Impoverished Malawi in 2007 gave Zimbabwe a “soft loan” of $100 million while still under the leadership of President Robert Mugabe’s late ally Bingu Mutharika. Harare only repaid $76 million.
Mutharika, who was once married to a Zimbabwean and was given a farm in the country, died after suffering a cardiac arrest last month.
His successor Joyce Banda has been making a radical shift in her country’s foreign policy and purging her government of the late president’s allies.
According to a report in the Nyasa Times newspaper on Friday, Malawi’s Energy minister Cassim Chilumpha, the delegation had been promised $12 million and the balance would be settled later.
He said the money would be used to buy fuel as the country had been facing a critical shortage for the last two years.
Mutharika’s government had virtually written off the debt, according to the report.
“When Mutharika was still in power, it almost became certain that the improverished nation had written off the loan to Zimbabwe, a country with better infrastructure, agriculture and industry,” the paper said.
“Malawians took it as an insult to the poor majority who still live on less than $1 per month.
“The Malawi government through the Reserve Bank of Malawi issued the loan to then hunger stricken Zimbabwe, through its Reserve Bank under very questionable circumstances as the deal only came into public domain three years down the line.”
Mugabe counted Mutharika as one of his best allies in the Southern African Development Community where peers have openly shown their impatience over his reluctance to reform.
Early this month cash strapped Zimbabwe was forced to make a down payment for a $70 million debt to Zambia after it unilaterally disposed the assets of the Central African Power Corporation (Capco).
Zimbabwe jointly owned Capco during the era of the Federation of Rhodesia and Nyasaland.
Harare disposed of the assets without consulting its neighbour and Zambia had threatened to block the construction of the Batoka Gorge hydro power station until it got its share of the proceeds.
Zambia’s Mines and Energy minister Christopher Yaluma said Zimbabwe had paid $5 million so far and would have paid $20 million by June.
He said a bank account had been set up where Zimbabwe would be depositing the money regularly.
In January, the two countries signed a memorandum of understanding to cooperate in the in Batoka project that is estimated to cost $4 billion.
But implementation hinged on Zimbabwe paying off the Capco debt.