Zambia Secures Debt Restructuring Deals with China and India
Zambian President Hakainde Hichilema announced that agreements have been reached between China and India to restructure Zambia’s debt holdings.
This move comes as Zambia seeks to address its significant debt burden, which exceeds $13 billion in external debt, a challenge compounded by its status as Africa’s second-largest copper producer, which halted payments in 2020.
Last year, Zambia made progress in modifying $6.3 billion in debts owed to official lenders. However, efforts were hindered when China, as the largest creditor, objected to a deal with private investors involving approximately $4 billion in bond claims, underscoring the significance of China’s recent agreement.
Speaking at the annual N’cwala harvest ceremony, President Hichilema expressed optimism, stating, “We are achieving this steadily, and now we turn our attention to the private creditors.”
Zambia’s successful negotiations with creditors are crucial for securing continued support from the IMF, amounting to $1.3 billion, and revitalizing its economy.
The concept of “comparability of treatment” emerged as a key sticking point in negotiations. This term, though vaguely defined, holds importance in ensuring equitable treatment of public and private creditors in debt restructuring.
Finance Minister Situmbeko Musokotwane emphasized the need for clarity on this concept to facilitate agreements with private creditors.
Meanwhile, Zambia’s central bank grapples with the depreciation of the kwacha against the dollar and rising inflation, exacerbated by one of the worst droughts in recent memory. Mr. Musokotwane stressed the necessity of additional government support for households amidst these challenges.
SOURCE:miningandbusiness-com
