Zambian chafes at delay in debt restructuring

Zambia’s finance minister, Situmbeko Musokotwane, has criticized delays in the debt restructuring process, the FT reports. The criticism comes in the wake of a Chinese request for multilateral lenders including the World Bank to take haircuts on their portion of Zambia’s debt.

Zambia is seeking to restructure $13 billion in external debt, Reuters reports. According to government data from late 2021, the southern African nation owes China about one-third of its total external debt. Chinese state banks are notoriously reluctant to take haircuts on debt, preferring to extend maturity dates to get back their principal investments.

Zambia defaulted on its external debt in 2020 and is pursuing restructuring under the G20 Common Framework, a program that is intended to speed up debt restructuring in low-income countries.

“Initially there was a lot of hope this would be done in a rapid way, that it would be relatively simple,” Razia Khan, chief economist for Africa and the Middle East at Standard Chartered Bank, told FMN in our latest podcast. While it hasn’t played out that way, the election of a private-sector friendly government in 2021 is still cause for optimism for investors interested in Zambia, Khan says.

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