| 14 April 2024, Sunday |

Zambia criticizes debt restructuring delays, according to FT

According to a report in the Financial Times on Monday, Zambia’s finance minister criticized the length of the country’s debt restructuring negotiations after China requested that the World Bank and other multilateral lenders provide debt relief, raising concerns about potential future delays.

Situmbeko Musokotwane stated in an interview with the newspaper that “time is of the essence” to complete the restructuring of approximately $13 billion in external debt this year.

Multilateral lenders, who don’t usually take haircuts, should participate in debt relief for Zambia, a Chinese foreign ministry official said last month. This insistence was one of the main sticking point in talks, a U.S. Treasury official told Reuters.

“Discussions at higher levels like those just make our situation worse, because what we are looking for is urgent solutions, not discussions that may drag out the matter,” the FTquoted Musokotwane as saying.

The FT report was corrected on Monday to say that the minister had criticised debt restructuring delays, not rejected China’s call for multilateral banks to offer debt relief.

“China has always attached great importance to the Zambian debt issue,” Wang Wenbin, a Chinese foreign ministry spokesman, told a regular press briefing in Beijing on Monday. “Under the common framework of the Group of 20, it has played a constructive role in dealing with Zambia’s debt,” he added.

The People’s Bank of China and the Ministry of Finance both did not respond to a Reuters request for comment.

Zambia became the first African country to default in 2020 following the onset of COVID-19, but the restructuring of its external debts of almost $15 billion with creditors including China and Eurobond holders has been greatly delayed.

Government data showed Zambia owed Chinese creditors nearly $6 billion of the total of $17 billion external debt at the end of 2021.

U.S. Treasury Secretary Janet Yellen and other Group of Seven countries have grown increasingly frustrated about what they see as foot-dragging by China in moving forward on debt rescheduling for countries seeking help.

“Zambia is in no position to reject any proposals between China and the World Bank,” Zambia’s finance ministry said in a statement published later on Monday, adding it hoped for a “successful debt restructuring early this year”.

“Zambia remains appreciative of the significant effort being asked of all Zambia’s creditors – and particularly our Chinese creditors,” the statement added.

  • Reuters