Musokotwane Raises Hopes on Debt Deal

Finance Minister Situmbeko Musokotwane has raised hopes that the restructuring of Zambia’s foreign debts could be completed in the first half of this year.

Speaking to the Financial Times, the minister warned that it was “complex and dangerous to give timelines” but said that the government had made progress in negotiations with creditors. “If I can get it earlier that would be even better.”

Musokotwane expressed his optimism about the debt restructuring during the ongoing African Mining Indaba in Cape Town. Despite the challenges posed by negotiating with creditors - in particular China, which holds a substantial portion of Zambia's debt - the minister remains hopeful, aiming for an even swifter resolution.  

Members of the Treasury travelled to China at the end of January to discuss debt restructuring with members of China’s commercial banks as well as delegates from the country’s Export-Import Bank. The IMF states that Zambia currently owes China EXIM $4.1 billion, and a further $1.8 to other lenders in China.

Chinese creditors rejected an initial restructuring deal for its Eurobonds late last year, but following new discussions, Secretary to the Treasury Felix Nkulukusa assured Zambia is “on course to reach a new agreement.”

Zambia has been looking to restructure its debt since November 2020, after it became the first African country to default on its Eurobond debt. A debt deal will free up government spending for vital infrastructure, the lack of which is still a major obstacle to Zambia’s economic diversification and human development.  

Two medical facilities in Copperbelt Province are presently undergoing enhancements to become first-level hospitals, while the Ministry of Defense has entered a five-year agreement with US-based Landlock Natural Paving Inc. to build over 3,000 miles of roads across the nation, with construction slated to commence as soon as next month.

Director of the African Department at the International Monetary Fund (IMF), Abebe Selassie, told reporters that the decision is now “firmly in the court of the Official Creditor Committee”, adding that he is hopeful a decision will be made “sooner rather than later”.