Zambia is working very hard with its creditors, including China, so that hopefully a debt restructuring can be agreed by the end of March or shortly afterwards, Finance Minister Situmbeko Musokotwane said on Wednesday.
Zambia was the first African country to default on its sovereign debt during the COVID-19 pandemic in 2020, but the restructuring of its external debts to creditors including China and Eurobond holders has been greatly delayed.
“We have done everything on our side to get the debt restructured. Unfortunately the process where so many interested groups are involved on the creditor side, there’s been a delay,” Musokotwane told an online forum.
China, Zambia’s largest bilateral creditor, was being engaged on the debt restructuring with bilateral engagements on an almost weekly basis, he added.
Zambia’s external debt stood at $14.87 billion at the end of June 2022, the minister has previously said.
Chinese lenders accounted for almost $6 billion of debt at the end of 2021, according to government data. In July 2022, Zambia’s government cancelled $2 billion in undisbursed loans, of which about three-quarters were Chinese.
China has publicly expressed its support for Zambia in dealing with its debts, while also calling for multilateral lenders like the World Bank to offer struggling countries debt relief, something not currently done.
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 negotiations for countries seeking debt relief.
Musokotwane said delays in the debt restructuring process were putting pressure on the local currency as foreign investors were scared to invest in Zambian bonds for fear of their investment being subject to restructuring.
Zambia’s kwacha currency has fallen 11.2% against the U.S. dollar this year, according to Refinitiv data .
