Officials said on Thursday that Zambia's lenders, including its largest creditor China, had agreed to restructure the country's public debt, offering financial relief to the first African country to fail since the Covid outbreak.
The president of Zambia, Hakainde Hichilema, announced in a tweet that the nation has arrived at an agreement on a debt treatment with our official creditors," describing it as a "significant milestone in our journey towards economic recovery (and) growth."
An anonymous French official who spoke on the margins of a meeting to restructure the international financial system in order to better combat poverty and climate change confirmed the deal on Zambia's $6.3 billion debt.
With a population of close to 20 million, Zambia is the largest copper producer in Africa. In 2020, however, Zambia defaulted on its $18.6 billion foreign debt after discussions stalled due to disagreements between Chinese and Western creditors. The loan arrangement had allegedly been delayed by China, according to the US.
The arrangement covers bilateral loans owed by Zambia to other nations, the majority of which is owed to China ($4.1 billion), according to the French source, who also noted that the lending procedure had been "difficult".
Among the international leaders present at the two-day meeting organized by French President Emmanuel Macron were Chinese Premier Li Qiang and Hichilema.
Private creditors, who are owed $6.8 billion, will need to "make a similar effort to what we have done," the French official added.
It is not possible to restructure a portion of Zambia's external debt, which is owned by the World Bank, the International Monetary Fund, and multilateral development institutions. The entire amount of debt due by the nation is $32.8 billion, $18.6 billion of which is owing to foreign creditors.
"This unique and innovative agreement specifies both a baseline and a contingent treatment that would be automatically triggered if the assessment of Zambia's economic performance and policies improves," said IMF chief Kristalina Georgieva.