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Zambia, Ethiopia next in line for debt relief – French source

PUBLISHED: Thu, 28 Jan 2021 18:54:51 GMT

PARIS, Jan 28 (Reuters) – Zambia and Ethiopia are the countries most likely to follow in Chad’s footsteps and seek a debt restructuring under a new G20 common framework, a French finance ministry source said on Thursday.

Chad became on Wednesday the first country to officially request a debt restructuring under the new framework agreed last year by China and other creditor countries in the Group of 20 economic powers.

“Among the countries that are the subject of particular interest are Zambia and Ethiopia,” the source said.

“The debt sustainability situations suggests they could be candidates for the common framework,” the source said, adding that Sudan was also a concern although it could get debt relief under an existing initiative for heavily indebted poor countries.

Government creditors have already frozen both Ethiopia and Zambia’s interest payments as part of a broader initiative to help developing countries cope with the coronavirus crisis.

The finance ministries of both countries were not immediately available for comment when contacted by Reuters.

Zambia had already sought IMF support after becoming Africa’s first pandemic-era sovereign defaulter last year when it failed to make a payment on one of its bonds.

The economic fallout from the pandemic has severely strained the public finances of some developing countries, many of which have borrowed heavily from China in recent years.

That prompted G20 countries to agree the common framework in November for the poorest countries, bringing China, India and Turkey – which are not members of the Paris Club – into a coordinated debt restructuring process for the first time.

The first restructurings were likely within the next six months, the French source said. (Reporting by Leigh Thomas; Additional reporting by Omar Mohammed in Nairobi and Joe Bavier in Johannesberg; Editing by Alison Williams)

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