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Zambia Creditors Agree to Breakthrough Debt Restructuring Deal


FILE - Zambian President Hakainde Hichilema, center, is pictured in Addis Ababa, Ethiopia, on Feb. 19, 2023. Zambia is now working to secure restructuring of its heavy debt load, with prime debt holder China agreeing.

PARIS — Zambia's lenders including major creditor China have agreed to restructure the country's public debt, a French official said Thursday, providing financial relief to the first African nation to default after the COVID-19 pandemic.

The agreement on $6.3 billion of Zambia's debt was confirmed by the official on condition of anonymity on the sidelines of a summit aimed at revamping the international financial system to better tackle climate change and poverty.

Zambia, Africa's biggest copper producer, defaulted on its $18.6 billion external debt in 2020, with China, its biggest creditor.

The United States had accused China of dragging its feet on a debt agreement for Zambia.

The deal involves bilateral debts between Zambia and other countries, with the bulk — $4.1 billion — being its debt with China, the official said, noting that the process among lenders had been "difficult."

Chinese Premier Li Qiang was among the world leaders attending the two-day summit hosted by French President Emmanuel Macron.

The French official said private creditors, who are owed $6.8 billion, will have to "make a similar effort to what we have done."

In Lusaka, a source close to the presidency said the government had "yet to see the whole deal but so far this is good."

"It's something which is good and will allow the government to channel the resources to social sectors like ... free education," the senior government official told AFP on condition of anonymity because he has no authority to comment on the deal.

Part of Zambia's external debt, which is held by the International Monetary fund, the World Bank and multilateral development banks, cannot be restructured. The country's total debt amounts to $32.8 billion.

Zambia's debt soared under former President Edgar Lungu, who was criticized for borrowing huge sums to finance infrastructure projects during his six years in power before he lost elections in 2021.

President Hakainde Hichilema is attending the Paris summit.

The two-day Paris summit is focused on reforming the global lending system in the face of the rising costs of damage from climate change.

The eve of the summit saw a meeting of the Paris Club, a group of creditor countries that seeks to help struggling countries pay their debts — of which China is not a permanent member.