China has forgiven an overdue multi-million dollar loan to Vanuatu from 2004 that its government reportedly thought was a gift.
Photo: 123rf
News of the debt relief emerged from several agreements signed between the two countries this month and obtained by the Daily Post newspaper.
According to China, the $US2.8 million sum, which went towards the Melanesian Spearhead Group's headquarters in Port Vila, was a loan.
But Vanuatu government officials told the Daily Post that until three weeks ago they thought the loan was a grant.
The payment was due to be paid back in December 2015 but was waived by China at the APEC Summit in Papua New Guinea earlier this month.
Also agreed to at the summit was a $US43.3 million loan from China's Exim bank for a road extension on the island of Tanna.
At APEC, Vanuatu and China also inked a separate memorandum of understanding (MoU) to establish a "joint economic and trade commission" which would meet every two years.
Another MoU set up friendly exchanges between China's Guangdong Province and Vanuatu.
Guangdong would "carry out more mobile medical treatments and health lectures" in Vanuatu and assist in other areas of health, as well as education, culture, tourism, media, youth exchanges and personnel training".