Zambian Finance Minister Rejects Chinese Call For World Bank To Join Restructuring Efforts

The Zambian Finance Minister, Situmbeko Musokotwane, has taken a strong stance in favour of the government's position regarding debt restructuring.

He has rejected a call from China for the World Bank and other multilateral lenders to join the restructuring effort, emphasizing the importance of timely action and decrying any potential delays.

Dr Musokotwane highlighted that the restructuring of around $13 billion of external debt must be completed this year, three years after the country defaulted on its loans.

He also expressed his frustration with discussions at higher levels, which he believes only prolong the process and make the situation worse.

China is Zambia's largest creditor, with around $6 billion in infrastructure loans spread among various Chinese banks. The country is also owed around $3 billion by all of its US dollar bondholders.

While China agreed in principle last year to provide debt relief through the G20 common framework, detailed plans for restructuring have yet to be established.

As a result, the government has been unable to access a $1.3 billion IMF bailout or resume paying its debts.

The Zambian government has asked its creditors to reduce the value of their claims by over $6 billion, either through direct losses on principal or reduced interest rates and extended repayment.

However, Beijing has been reluctant to set a precedent for taking direct cuts on its loans to developing nations.

Despite this, experts have suggested that Chinese banks could reduce their rates low enough to meet Zambia's debt reduction target and still receive more than what would be paid to multilateral lenders.

The Zambian government have shown its determination to secure its debt relief as quickly as possible and that it is confident in its progress with creditor engagements. So far, the country has made one of its best fiscal performances in decades, with revenues and spending on target.

Despite some objections from creditors, the New Dawn government has made it clear that Zambia is committed to removing the burden on its citizens and is confident in its plans for economic stability.

Photo: Zinyange Auntony/Bloomberg