…Deal crucial to ending years-long debt restructuring process
….Zambia became Africa’s first pandemic-era sovereign defaulter
Zambia has reached a deal with two Chinese state-owned lenders to restructure $1.5 billion in debt, according to Finance Minister Situmbeko Musokotwane, a major step toward concluding a years-long process.
The loans owed to China Development Bank and Industrial and Commercial Bank of China were among the biggest remaining liabilities the southern African nation needed to rework under a debt restructuring process it began in 2020 after becoming Africa’s first pandemic-era sovereign defaulter.
The government has now reached in-principle deals with the lenders, Musokotwane said Friday in a copy of his 2025 budget speech.
The International Monetary Fund has found the deals fit within its program parameters with the nation, and Zambia’s official creditor committee said it provided comparable debt relief to what they had agreed to, according to Musokotwane.
The southern African nation is in a 38-month program with the IMF that ends next year. While China co-chaired its official creditor committee with France, CDB and ICBC opted to negotiate individual deals as commercial lenders.
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“The next step is to finalize the agreements for execution,” Musokotwane said.
Zambia owed CDB $469 million as at end-June, according to a mid-year update from the Finance Ministry, which didn’t provide a figure for ICBC.
It’s also reached deals in-principle with Nedbank Group Ltd. and ZTE Technologies and is making progress in finalizing both, Musokotwane said.
While the IMF and official creditor committee’s approvals are important, they might not be enough to get these new deals over the line. Bondholders when negotiating the restructuring of $3 billion of dollar notes included a clause known as a “most favored creditor.”
That essentially means that if more favorable terms are negotiated with other creditors they need to be offered the same.
Musokotwane didn’t provide details on the terms agreed to with CDB or ICBC.
— With assistance from Rene Vollgraaff
Source: allafrica.com
