In a significant symbolic move, creditor countries have agreed to restructure a portion of Zambia’s debt, making it the first country in Africa to fall behind on repayments following the outbreak of COVID-19. China is among its major creditors.
During an international summit in Paris, attended by Zambia’s key lenders, a French government source announced on Thursday that there is an agreement in place to restructure $6.3 billion of the country’s debt. Zambia, a southern African country with a population of around 20 million, had defaulted on its debt payments in 2020. Until now, negotiations had been hindered by disputes between China and Western creditors.
During the summit, International Monetary Fund Managing Director Kristalina Georgieva congratulated Zambian President Hakainde Hichilema, commending the “effective” debt restructuring. French President Emmanuel Macron, who organized the “New Global Financial Pact” summit, hailed the agreement as “historic.” In a Thursday evening tweet, he wrote, “We remain ready to respond to other countries facing the debt trap so they can benefit from a multi-party approach.”
Zambia’s total debt amounts to $32.8 billion, including $18.6 billion owed to foreign creditors, according to figures released by its finance ministry until the end of 2022.
President Hichilema expressed his gratitude via Twitter, thanking official creditors for their support and ongoing commitment. He stated that this agreement represents “an important step towards economic recovery and growth.”
A source close to the Zambian presidency in Lusaka, who requested anonymity when speaking to Agence France-Presse, revealed that the government has not yet seen the full agreement. However, the source acknowledged that it is a positive development, allowing the government to allocate these resources towards social areas, such as free education.
