President to visit China, seeks to formalize debt deal
Zambian President Hakainde Hichilema will visit China from Sunday, China’s foreign ministry announced, bringing the indebted African country’s long-running struggle to restructure its external debt to its biggest creditor’s door.
Around two-thirds of the $6.3 billion debt Zambia is in the process of restructuring with its official creditors is owed to the Export-Import Bank of China, underlining the importance of Beijing’s support to an agreement reached in June enabling debt relief.
Zambia in 2020 defaulted on its sovereign debt and became a test case for a debt restructuring framework initiated by the Group of 20 wealthy nations during the pandemic intended to streamline providing debt relief, though it became bogged down with disagreements over which lenders should accept haircuts.
The process has been painfully slow for Zambia, which in June at a summit in Paris finally struck a deal with its bilateral creditors — including China — to reschedule its payments over more than 20 years and with a three-year grace period during which only payments on interest are due.
The agreement meant the International Monetary Fund could approve the disbursement of a further $189 million in support, part of a $1.3 billion package approved in September.
To formalise the agreement, Zambia should sign an memorandum of understanding with its official creditors, which besides China includes the United Kingdom, France, South Africa, India and Israel, which Zambia has it said it aims to do so by the second review of the IMF’s rescue loan programme, scheduled for October.
Hichilema will be in China from Sept. 10 to 16, the announcement said.
China has significant commercial interests in Zambia, having invested in over thirty projects in the country through its Belt and Road Initiative between 2014 and 2023, according to data compiled by the American Enterprise Institute think tank, worth $11.3 billion in total, ranging from the energy sector to agriculture and aviation.
The world’s second-largest economy also imports a significant amount of raw copper from Zambia to refine and feed its hungry construction and transportation sectors.