Browsing: Zambia’s national debt crisis

Zambia intends to scrap almost $2 billion in projects in order to reduce debt www.theexchange.africa

In the year 2020, Zambia became the first nation in the Covid-19 era to default on its obligations. At the end of the year 2021, its total external debt was US$17.27 billion, of which China held US$5.78 billion. Currently, it is engaged in discussions with its creditors and the International Monetary Fund (IMF) to find a way to climb out of its current financial predicament and reduce its reliance on debt.

There are several other countries besides Zambia that owe a significant amount of money to China. It is believed that African countries’ debts with the country make up a third of the total obligations owed to private lenders who are not Chinese. Over a third of the debt repayments for the year, 2021 were transferred to Chinese lenders by Angola, the Republic of Congo, Cameroon, Djibouti, Ethiopia, and Zambia, respectively.

Deborah Brautigam, a researcher with the China Africa Research Initiative (CARI), states in a report that ” It cannot be overstated how exceptional Zambia’s debt burden is in comparison to that of other countries that have taken Chinese loans.

After Zambia’s sovereign default, the G20 expressed concern that a “debt tsunami” could engulf the continent’s most heavily indebted nations. In response, the G20 and the Paris Club established a “common framework” with the intention of assisting more than 70 countries in dealing with the aftermath of the pandemic by providing debt relief and restructuring.

Given the substantial share of Zambia’s debt that is owned by Chinese lenders, the Paris Club needed the participation of China, which is not a member of the Paris Club. At the beginning of May, it was announced that China would co-chair the official creditor committee with France.

At the Paris negotiations, it will be determined whether Chinese and international lenders can work side by side to establish a clear debt overhaul plan. This might also pave the way for debt-restructuring talks between Chinese institutions and other countries that are in debt.

Through Zambia Consolidated Copper Mines Limited (ZCCM), the Zambian government will assume ownership in Mopani Copper Mines with a 73%…