Zambia’s finance minister believes China should chair the creditors committee being created to restructure the country’s $17.3 billion in foreign debt because it will help speed up the process.
The Asian country, whose creditors account for more than a third of Zambia’s total foreign public obligations, said in April that it will join the formal creditors committee, reviving a delayed procedure.
In an interview in Lusaka on Thursday, Zambian Finance Minister Situmbeko Musokotwane stated, “It does make sense for our biggest creditor to play a prominent position, to have a leadership role in the proceedings.” “They have agreed to serve as a co-chair, which we welcome since it would boost the odds of a settlement – they are the largest single creditors.”
Since 2020, the first African country to default during the epidemic has been attempting to restructure its foreign debt, which includes $3 billion in Eurobonds. A swift settlement will assist the continent’s second-largest copper producer get access to World Bank and African Development Bank concessional loans, as well as making it simpler for enterprises to access foreign markets to fund expansion.
The administration of President Hakainde Hichilema has endorsed the Group of 20’s so-called Common Framework for Debt Treatment, which is aimed at assisting impoverished nations. Even after receiving preliminary clearance from the International Monetary Fund in December for a $1.4 billion assistance package, progress has been slow. The largest stumbling block has been China’s refusal to join the process.
“We’re simply thrilled that they’ve made a public declaration that they’ll be joining,” Musokotwane added. “Whatever had previously held them back is now past. We’re not interested in becoming involved in it.”
Despite the delays, Zambia is on target to finish restructuring negotiations by the end of next month and receive final IMF board approval for the loan, he added.
France and South Africa have also agreed to co-chair Zambia’s creditors committee, which will discuss a debt restructure based on the conclusions of a debt sustainability review done earlier this year by the World Bank and IMF. Zambia will next request that private creditors negotiate similar arrangements for their obligations under the Common Framework.
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