ZIMBABWE will supply Malawi with fuel worth $23 million as repayment for a loan extended in 2007.
Malawi energy minister Cassim Chilumpha told local media that the deal had been agreed during meetings with Zimbabwe officials last Friday.
Malawi gave Zimbabwe a soft loan of $100 million in 2007 for buying maize to help deal with critical food shortages worsened by economic sanctions imposed by Western donors.
Zimbabwe repaid $76 million of the loan but failed repay the balance apparently because the close relationship between Malawi’s late President Bingu wa Mutharika and President Robert Mugabe.
But new Malawi leader, Joyce Banda has been pressing for payment of the balance as her country battles an economic crisis which donors have warned could yet get worse.
“The government of Zimbabwe has agreed to give us fuel and very soon they will dispatch trucks. We have accepted this arrangement because currently, we are in need of the fuel,” Chilumpha said.
Officials said fuel worth $23 million is just short of reaching Malawi’s monthly national requirement of $30 million.
Malawi has been plagued by fuel and foreign exchange shortages for almost two years – problems that helped spark anti-government protests last July in which at least 18 people were killed.
The economic situation was worsened by tensions with key international donors and institutions that had been important sources of foreign exchange.
Several key donors - including former colonial power Britain - suspended aid to the country, citing concerns about growing authoritarian tendencies in Mutharika's government.
But after Mutharika's sudden death last month, President Banda has moved swiftly to restore relations with international lenders and donors.