By Chris Mfula
LUSAKA (Reuters) – China’s government is in the process of consulting internally about Zambia’s international debt restructuring, the southern African country’s treasury secretary said on Tuesday, as it grapples with a $32-billion debt burden that continues to climb.
“I went to China myself with the minister of foreign affairs and China indicated they were coming on board and they are just making internal consultations,” Secretary to the Treasury Felix Nkulukusa told Reuters, declining to give further details of the March trip.
Zambia was the first country to default in the pandemic era, in November 2020, as it buckled under debt of more than 120% of GDP. The debt hit $31.74 billion at the end of 2021, 17% higher than six months earlier, according to official Zambian data.
China and Chinese entities held $5.78 billion.
“We are now waiting for the official creditor committee to be formed and then we will present the debt sustainability analysis,” Nkulukusa said.
Zambia and China’s foreign ministers held talks on March 19, Zambia’s embassy in Beijing said in a statement at the time, during which “the two sides applauded the excellent relations that exist between Zambia and the People’s Republic of China.”
Zambian finance minister Situmbeko Musokotwane told parliament on March 25 that its creditor committee would be announced “within the next few weeks”.
He said last week that the southern African nation should get a formal deal with the International Monetary Fund, which holds its Spring Meetings next week, by mid year.
Zambia reached a staff level agreement with the IMF on a $1.4 billion, three-year credit facility in December 2021.
“We’ve got one international creditor that seems to taking a bit more time to make a decision,” Britain’s Africa minister Vicky Ford said on a visit to Zambia last week on the privately owned Hot FM Radio, without giving further details.
Zambia is also struggling to service some “old debt”, presidential spokesman Anthony Bwalya told Reuters, but declined to specify which.
“On one hand we need to service those debts and on the other we need to provide critical public services,” Bwalya said.
“That’s why it is important that we quickly anchor down that IMF deal so that those monthly payments – principal and interest – can be brought down to something that is within affordable margins.”
At the end of 2021, the country was in interest arrears on a majority of its foreign currency debt, according to government data.
China has lent African countries hundreds of billions of dollars as part of President Xi Jinping’s Belt and Road Initiative (BRI) which envisaged Chinese institutions financing the bulk of the infrastructure in mainly developing nations. Yet the credit has dried up in recent years.
(Reporting by Chris Mfula, Writing by Rachel Savage; Editing by Nick Zieminski)
