Zambia has reached an agreement to restructure $6.3 billion in debt owing to other governments, including China. This agreement represents a long-awaited victory for indebted countries all over the world who have been engaged in protracted negotiations with creditors.
After becoming the first African nation to default on its national debt in 2020 due to the COVID-19 pandemic, Zambia has had a difficult time reaching an agreement.
“Zambia has reached an agreement on a debt treatment with our official creditors – a significant milestone in our journey towards economic recovery & growth,” Zambian President Hakainde Hichilema said on Twitter.
The agreement stipulates that Zambia’s debt will be rescheduled over a period of more than 20 years, with a three-year grace period during which just interest payments are required. The largest official creditor of Zambia is China.
According to the deal, Zambia’s debt is to be repaid over a period of more than 20 years, with a three-year grace period during which just interest payments are required. Zambia’s biggest formal creditor is China.
According to a French official who wished to remain anonymous, the debt targeted for restructuring includes $1.3 billion in arrears, and private sector creditors are anticipated to do the same on the $6.8 billion owed to them.
Zambia is seen as a test case for a debt restructuring mechanism supported by the Group of 20 wealthier countries meant to streamline aid for countries trapped in a developing world financial crisis brought on in part by the pandemic.
The French official stated that China did not want to appear to be further delaying debt relief for Zambia during the meeting and that French President Emmanuel Macron’s discussions with Chinese officials in Beijing in April also helped to resolve the issue.
