The foreign ministry of China stated on Friday that Zambian President Hakainde Hichilema will travel to China starting on Sunday. This will bring the debt-ridden African nation’s protracted fight to restructure its external debt to its biggest creditor.
The Export-Import Bank of China is owing around two-thirds of the $6.3 billion debt Zambia is restructuring with its formal creditors, highlighting the significance of Beijing’s support for a June accord providing debt relief.
Zambia defaulted on its sovereign debt in 2020 and was used as a test case for a debt restructuring framework developed by the Group of 20 wealthy countries during the pandemic. However, the framework was slowed down by disputes over which lenders should accept haircuts.
Zambia’s progress has been excruciatingly slow, but in June, at a conference in Paris, it finally reached an agreement with its bilateral creditors, among them China, to reschedule its payments over a period of more than 20 years, with a three-year grace period during which only interest payments are required.
As a result of the deal, the IMF was able to sanction the payment of an additional $189 million in support as part of the $1.3 billion package that was agreed in September.
Zambia has stated that it intends to do so by the second review of the IMF’s rescue loan program, which is scheduled for September. In order to formalise the agreement, Zambia should sign a memorandum of understanding with its official creditors, which, in addition to China, also include the United Kingdom, France, South Africa, India, and Israel.
The announcement states that Hichilema will be in China from September 10 to 16. According to data compiled by the think tank American Enterprise Institute, China has substantial commercial interests in Zambia. Between 2014 and 2023, China invested in over thirty projects in the country through its Belt and Road Initiative, totaling $11.3 billion. These projects range from the energy sector to agriculture and aviation.
The second-largest economy in the world also imports a sizeable quantity of unprocessed copper from Zambia to purify and supply its ravenous building and transportation industries.
