BEIJING, July 18, 2001 -- China Tuesday agreed to cancel part of the debt owed by Tanzania "with a view to supporting Tanzania to develop its national economy and reduce its debt burden."

    According to agreements signed by two sides, the Chinese government agreed to exempt Tanzania from the obligations of paying back of 15 batches of interest-free loans which had matured by December 31, 1999 with a total amount of 289.208 million yuan, US$19.2 million and 1.275 million pound sterling.

    The debt relief accounts for one third of the total Tanzania's debt owed to China.

    The agreements were signed in Dar Es Salaam Tuesday on behalf of their respective governments by He Xiaowei, the visiting Chinese Assistant Minister for Foreign Trade and Economic Cooperation, and Tanzanian Finance Minister Basil Mramba.

    China also agreed to overwrite two batches of interest-free loans of Zanzibar, amounting to 35.28 million yuan.

    Besides debt cancellation, China also pledged to provide gratis assistance of 30 million yuan to Tanzania to supplement the deficient construction expenses for the Chalinze Water Supply Project in eastern Tanzania so as to speed up availability of clean and safe water supply to the population in the area.

    'This is a great event of the economic and technical cooperation between China and Tanzania in the new millennium, and a sign of further development of the excellent relationship between China and Tanzania," the Chinese assistant minister said at the signing ceremony.

    He noted that the success of China-Africa Cooperation Forum held last October in Beijing had enhanced the friendly cooperation between China and African countries including Tanzania.

    "The Chinese government attaches great importance to the follow-up actions of the forum. Overwriting the debts of Tanzania and Zanzibar is such a concrete step," said the Chinese official.

    On behalf of his government, Mramba expressed his appreciation to China, a non-Paris Club creditor for accepting to grant a partial debt relief to Tanzania and for providing a grant to finance the water project.

    He noted that due to debt relief from international communities, Tanzania is expected to budget for substantial spending in key poverty elimination sectors in agriculture, education, health, water, roads, the judiciary and in combating HIV/AIDS.

    However, Mramba admitted that Tanzania continues to bear a heavy debt burden of some US$7.4 billion currently owed to all foreign countries, including US$891 million owed to non- Paris Club countries.

    "Today's pioneering initiative by the People's Republic of China is a very encouraging example to this latter category of foreign creditors. To them I say, 'please take a cue from China's initiative,'" Mramba added.

    Tanzania is China's largest aid-recipient country in Africa. Since Tanzania's independence in the 1960s, China has rendered various kinds of aids to the country. Main Chinese-supported projects are the Tanzania-Zambia Railway (TAZARA) and the Friendship Textile Mill.

(Source: China Daily)