Zambia on track for debt restructuring next quarter: finance minister

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According to Zambia's finance minister, the country is "engaging actively" with its largest bilateral creditor, China, to restructure its USD 15 billion external debt by the first quarter of 2023.

The current government, which took office last year, has been working diligently to restructure its loans and rebuild an economy that was ravaged by mismanagement under previous administrations and the COVID-19 measures.

Zambia received approval in August from the International Monetary Fund (IMF) for a USD 1.3 billion, three-year loan programme to restructure its debts, which at the end of June 2022 were USD 14.87 billion.

However, China wants more clarity regarding the IMF assumptions that form the basis of Zambia's restructuring negotiations with all creditors.

An IMF spokesperson said China and other official creditors have a number of technical questions following the publication of its staff report and Debt Sustainability Analysis for Zambia's programme request.

Zambia's much-delayed debt restructuring is viewed by analysts as a test case for countries that have borrowed heavily not only on the capital markets, but also from countries like China.

As of the end of 2021, Chinese creditors accounted for almost USD 6 billion of Zambia's external debt, which was then USD 17.27 billion.

Zambia's government said in October it needs a present value debt reduction by 2027 of USD 6.3 billion, or 49 percent of the debt being restructured, to meet IMF targets, a level some international bondholders have previously said would be unacceptable.