Zambia says first creditor meeting set for Thursday

PUBLISHED: Tue, 14 Jun 2022 12:13:14 GMT
Chris Mfula
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

LUSAKA, June 14 (Reuters) – Zambia will hold its first meeting with its international creditors on Thursday, finance minister Situmbeko Musokotwane said, but acknowledged that the government’s aim of concluding negotiations by the end of June no longer looked tenable.

“We are one step closer to debt resolution because those discussions are beginning this Thursday,” Musokotwane told a media briefing on Tuesday. Read full story

France, which hosts the Paris Club forum for international creditors, and China are co-chairs of the bilateral negotiations to restructure Zambia’s external debt, which stood at $17.27 billion at the end of 2021, according to government data.

The southern African country reached a staff-level deal on a $1.4 billion three-year extended credit facility with the International Monetary Fund in December and needs to finish bilateral talks to secure the funding.

In 2020, Zambia became the first pandemic-era sovereign default, buckling under a debt burden of more than 120% of gross domestic product (GDP).

Musokotwane said that he was hopeful the IMF programme would kick in after the creditor meeting and that Zambia had been ready for the meeting since December, but creditors had their own issues which had now been resolved.

“We are another step forward towards resolving this problem of unsustainable debt,” he said.

Musokotwane had previously repeatedly said he hoped the restructuring process would be done by the end of June, a timetable analysts had long deemed ambitious. Read full story

Last month, sources with knowledge of the process said China was holding up the debt relief discussions. China said it was ready to support Zambia with its debts. Read full story

China and Chinese entities held $5.78 billion of Zambia’s debt at the end of 2021.

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