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Zambia Will Restructure Debt - Official


FILE: Zambia Finance Minister Situmbeko Musokotwane speaks during a press briefing at International Monetary Fund headquarters in Washington, April 25, 2009.

Zambia is pushing hard to complete the restructuring of nearly $15 billion of external debt in the first quarter of 2023 and is "in active engagement" with its largest bilateral creditor China, Zambia's finance minister said in an interview at the Reuters NEXT conference.

In August, Zambia won International Monetary Fund (IMF) approval for $1.3 billion, three-year loan program to help it restructure debts which the government said stood at $14.87 billion at the end of June 2022.

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

Zambia's Finance Minister Situmbeko Musokotwane told Reuters that China had sought clarification from the Zambian government and the IMF on their debt agreement, he said.

"The Chinese... are asking (for) a number of clarifications, which us and the IMF are providing them," Musokotwane said.

China wants more clarity on the IMF assumptions on which the loan program is based, he said, since these are meant to form the basis of the restructuring negotiations between Zambia and all its creditors.

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

The Export-Import Bank of China is representing all Chinese creditors in their restructuring negotiations with Zambia, Musokotwane said. These include commercial banks, the Industrial & Commercial Bank of China, Jiangxi Bank, and China Minsheng Bank..

China's Ministry of Foreign Affairs did not immediately respond to a request for comment.

Zambia defaulted on its sovereign debt in 2020 and the current government, which took power last year, has been on a quest to restructure its loans and rebuild an economy ravaged by mismanagement under previous administrations and COVID-19.

Zambia's much-delayed debt restructuring is seen by analysts as a test case for what are expected to be a spate of defaults in poorer countries that have borrowed heavily not only in the capital markets but also from countries including China.

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