Zambian president to visit China, seeks to formalise June debt deal

Zambian President Hakainde Hichilema will visit China from Sunday, China’s foreign ministry announced on Friday, 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 (MoU) 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 by the second review of the IMF’s rescue loan programme, scheduled for October.

“During President Hichilema’s visit… the two heads of state will hold talks and attend a ceremony to sign cooperation documents,” Mao Ning, a Chinese foreign ministry spokesperson, told a regular briefing on Friday.

“We will continue to maintain close communication with all parties in the Debt Committee and work with them on any follow up work,” she added, when asked whether that meant China would sign the MoU.

Hichilema will be in China from Sept. 10 to 16, the announcement said.

Zambia’s foreign ministry said Hichilema and Xi would sign several bilateral agreements, including on economic cooperation and investment, and discuss Chinese investment in Zambia’s energy, mining and infrastructure sectors.

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 takes around one fifth of Zambia’s exports, predominantly copper.

Source: Reuters