China offers to step in to assist Zambia’s $17.3bn debt restructuring

China, whose lenders account for more than one-third of Zambia’s total external public liabilities, indicated that it would join the official creditors committee. Photo: iStock

China should head the creditors committee being formed to renegotiate Zambia’s $17.3 billion (R276.19 billion) of foreign debt because that will help accelerate the resolution process, the southern African country’s finance minister said this week.In April, the Asian nation, whose lenders account for more than one-third of Zambia’s total external public liabilities, indicated that it would join the official creditors committee, breathing life into a process that had stalled.Zambian Finance Minister Situmbeko Musokotwane in an interview in Lusaka on Thursday, said:

Zambia, the first African nation to default during the pandemic, has been struggling to rework its external debt, including $3 billion in Eurobonds, since 2020. A quick resolution will help the continent’s second-largest copper producer access concessional loans from the World Bank and the African Development Bank, and make it easier for companies to tap international markets to fund expansion.President Hakainde Hichilema’s government has adopted the Group of 20’s Common Framework for debt treatment designed to help poor countries. Progress has been slow, even after Zambia won preliminary approval for a $1.4 billion support package from the IMF in December. The delay in China’s agreement to join the process has been the biggest stumbling block.Musokotwane said:

Despite delays, Zambia remains roughly on track to complete restructuring talks by the end of next month and win final approval for the loan from the IMF board, he said.France and South Africa have also offered to co-chair the creditors committee. Under the Common Framework, Zambia will then ask private creditors to negotiate comparable terms for its debts. – Bloomberg

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