Zambia: deal reached on debt restructuring

Zambia has reached an agreement to restructure its debt, following talks in Paris.

Zambian President Hakainde Hichilema was in the French capital for an international summit on finance this week. 

Zambia's creditors have agreed to reschedule $6.3 billion, including $1.3 billion in arrears, while private sector officials are expected to do the same on the $6.8 billion owed to them. 

The southern African country was the first African country to default on its debt in 2020, during the COVID-19 pandemic. 

Lengthy discussions

The agreement comes after years of discussions between Zambia and its creditors to restructure its external debt which amounts to $18.6 billion. 

The United States had previously accused China, Zambia's biggest creditor, of dragging its feet in talks, something Beijing denies. 

$4.1 billion of the $6.3 billion owed to government bodies was owed specifically to Export-Import Bank of China, according to a French official. 

"We wanted to [restructure the debt], we wanted to do it with our Chinese partners, and the presence of China's First Minster [Li Qiang] is a is a clear gesture of China's willingness to participate in these debt restructurings," said France's Finance Minister Bruno Le Maire in an interview with Radio France Internationale on Thursday. 

As agreed in the deal, Zambia's debt will be rescheduled over more than 20 years with a three-year grace period during which only payments on interest are due.

The restructuring will also enable Zambia to receive the next $188 million tranche of money from the International Monetary Fun, $1.3 billion package approved in August 2022.