LUSAKA (Reuters) -China invited Zambia’s private creditors to discuss the country’s debt later this month after official lenders agreed to a restructuring of its debt, Chinese ambassador to Zambia Du Xiaohui said on Thursday.
Zambia’s creditors have pledged to negotiate a restructuring of the country’s debts in a move welcomed by International Monetary Fund (IMF) Managing Director Kristalina Georgieva as “clearing the way” for a $1.4 billion programme.
The creditor committee, co-chaired by China and France, called on private creditors on Saturday to “commit without delay” to negotiating debt relief on terms at least as favourable.
“If the official creditors from China agree with the restructuring process, then the private sector from China will follow comparable terms to deal with the debt issue for Zambia,” Du said at a public discussion on Thursday.
“There is an invitation from co-chair China to other private creditors to have a friendly conversation on the Zambian debt issue this month,” he added.
Yvette Babb, fund manager at William Blair who participated in a creditor call with Zambian government officials on Thursday, said Lusaka expects to start negotiations with bilateral lenders by the end of 2022 and reach an agreement in principle with the bondholders’ committee by then.
While creditors did not receive any details on the country’s debt sustainability analysis (DSA), the Zambian government said it expected the IMF board to approve a new programme by the end of August, said Babb, which would allow debt restructuring talks to move forward.
In 2020, Zambia became the first African country in the pandemic era to default. The restructuring of its external debt, which amounted to more than $17 billion at the end of 2021, is seen by many analysts as a test case.
The first bilateral creditor meeting was held in June after Zambia’s government complained of delays to the restructuring. Talks are taking place under the Common Framework, a debt relief process launched by the Group of 20 major economies in 2020 which has been criticised by some for being slow to yield results.
(Reporting by Chris Mfula and Jorgelina do Rosario, Editing by Olivia Kumwenda-Mtambo, Mike Harrison and Emelia Sithole-Matarise)
