In recent news, Zambia’s finance minister, Situmbeko Musokotwane, expressed his concerns over the prolonged nature of the country’s debt restructuring negotiations. The minister called for “urgent solutions” as “time is of the essence” to finish the restructuring process of around $13 billion of external debt this year.
The prolonged nature of these negotiations can be attributed to a recent call from China for the World Bank and other multilateral lenders to offer debt relief, which sparked concerns of further delays. This call was one of the main sticking points in the talks, as the insistence for multilateral development lenders to participate in debt relief for Zambia is not a usual practice.
The Zambian debt issue has gained the attention of China, with a foreign ministry spokesman saying, “China has always attached great importance to the Zambian debt issue” and that it has played a “constructive role” in dealing with Zambia’s debt under the common framework of the Group of 20. However, the People’s Bank of China and the Ministry of Finance did not respond to a request for comment by Reuters.
Zambia became the first African country to default in the COVID-19 era in 2020, and the restructuring of its external debts, amounting to almost $15 billion, with creditors such as China and Eurobond holders has been greatly delayed. Government data shows that Zambia owed Chinese creditors nearly $6 billion of the total of $17 billion external debt at the end of 2021.
Meanwhile, U.S. Treasury Secretary Janet Yellen and the Group of Seven countries have grown increasingly frustrated about what they see as slow progress by China in moving forward on debt rescheduling for countries seeking help. China, on the other hand, argues that multilateral institutions should also be required to accept reductions in the debt they are owed.
In conclusion, it is imperative that a solution is reached soon as Zambia’s debt restructuring negotiations have dragged on for too long. The country needs a resolution that is fair and balanced for all parties involved, so that it can move forward with its financial stability and growth.