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Zambia Declines Calls to Allow World Bank Restructure its Chinese Loans

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Zambia has rejected China’s call for World Bank to join its debt restructuring.

Zambia’s Finance Minister Situmbiko Mosokotwane said in an interview that the South African country intends to repay a loan of around US$13 billion in 2023, three years after it defaulted.

As the COVID-19 pandemic ravaged Africa in 2020, Zambia became the continent’s first country to default on its external debt – valued at $17.3 billion.

Loan

A Chinese foreign ministry official said last month that multilateral creditors, who generally don’t accept haircuts, should participate in Zambia’s debt relief. A US Treasury Department official told Reuters that the insistence is one of the main sticking points in the talks.

Monday’s Financial Times report was corrected to say that the minister criticized delays in debt restructuring and did not dismiss China’s call for debt relief from multilateral banks.

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“China has always attached great importance to Zambia’s debt issue,” Wang Wenbin, a spokesman for China’s Foreign Ministry, said at a regular news conference in Beijing on Monday. 

“In the common framework of the G20, she has played a constructive role in dealing with Zambia’s debt,” he added.

The People’s Bank of China and the Treasury Department did not respond to a Reuters request for comment.

Zambia Declines Calls to Allow World Bank Restructure its Chinese Loans
Zambian finance minister

Zambia became the first African country to default in 2020 following the outbreak of COVID-19, but the restructuring of its roughly $15 billion in external debt to creditors, including China and international bondholders, has been significantly delayed.

Government data showed that Zambia owed about $6 billion to Chinese creditors at the end of 2021 out of a total external debt of $17 billion.

US Treasury Secretary Janet Yellen and other G7 nations are increasingly frustrated by what they see as China’s slowness in the debt restructuring of countries seeking debt restructuring.

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