Situmbeko Musokotwane, Zambia’s finance minister, during an interview at his office in Lusaka, Zambia, on Thursday, May 5, 2022. China should head the creditors committee being formed to renegotiate Zambias $17.3 billion of foreign debt because that will help accelerate the resolution process, Musokotwane said. Photographer: Zinyange Auntony/Bloomberg via Getty Images

JOHANNESBURG, Nov 30 (Reuters) – Zambia is pushing hard to complete the restructuring of nearly $15 billion of external debt in the first quarter of 2023 and is “in active engagement” with its largest bilateral creditor China, Zambia’s finance minister said in an interview at the Reuters NEXT conference.

Zambia defaulted on its sovereign debt in 2020 and the current government, which took power last year, has been on a quest to restructure its loans and rebuild an economy ravaged by mismanagement under previous administrations and COVID-19.

In August, Zambia won International Monetary Fund (IMF) approval for $1.3 billion, three-year loan programme to help it restructure debts which the government said stood at $14.87 billion at the end of June 2022.

Zambia’s Finance Minister Situmbeko Musokotwane told Reuters that China had sought clarification from the Zambian government and the IMF on their debt agreement, he said.

“The Chinese… are asking (for) a number of clarifications, which us and the IMF are providing them,” Musokotwane said.

China wants more clarity on the IMF assumptions on which the loan programme is based, he said, since these are meant to form the basis of the restructuring negotiations between Zambia and all its creditors.

Zambia’s much-delayed debt restructuring is seen by analysts as a test case for what are expected to be a spate of defaults in poorer countries that have borrowed heavily not only in the capital markets but also from countries including China.


At the end of 2021, Chinese creditors accounted for almost $6 billion of Zambia’s external debt, which was then $17.27 billion.

The Export-Import Bank of China is representing all Chinese creditors in their restructuring negotiations with Zambia, Musokotwane said. These include commercial banks, the Industrial & Commercial Bank of China 601398.SS, Jiangxi Bank 1916.HK and China Minsheng Bank 600016.SS.

China’s Ministry of Foreign Affairs did not immediately respond to a request for comment.

Musokotwane added that private creditors were cooperating well in debt relief discussions and that there had been a bondholder meeting this week.

Zambia’s government said in October it needs a present value debt reduction by 2027 of $6.3 billion, or 49% of the debt being restructured, to meet IMF targets, a level some international bondholders have previously said would be unacceptable.


Musokotwane also said he hoped to make an announcement by the first quarter of next year about potential new investors in Konkola Copper Mines (KCM) and Mopani Copper Mines (MCM).


“We are hoping that by first quarter of next year we should be there with some of them. And also some of the new investments that are coming from the U.S. and other places,” he said.

Zambia’s previous government put KCM into liquidation in 2019, triggering a legal dispute with its parent company, Vedanta Resources, that is now being settled out of court.

Zambia’s state-owned mining company ZCCM Investments Holdings ZCCM.LZ took over MCM in 2021 from commodities giant Glencore GLEN.L, which mothballed its operations in 2020 due to weak copper prices.

The government is aiming to treble copper production to 3 million tonnes per year within the next decade in Africa’s second largest producer of the mineral.

To view the Reuters NEXT conference live on Nov. 30 and Dec. 1, please click here.

(Reporting by Rachel Savage and Bhargav Acharya, Additional reporting by Nelson Banya in HarareEditing by Alexander Winning and Raissa Kasolowsky)