China open to debt restructuring deal with Zambia
US Treasury Secretary Janet Yellen has expressed cautious optimism that China will be willing to enter into a multilateral debt restructuring deal with Zambia, as the country serves as a crucial test case for efforts to help developing nations find relief from external debt.
During a brief stop in Zurich on Wednesday, Yellen met with her Chinese counterpart, Liu He, and raised the issue of Zambia’s debt restructuring. While Yellen described China’s response as “constructive”, she did not provide any further details.
The potential agreement would be in line with the Common Framework, a program established by wealthy nations to unify the positions of commercial and sovereign creditors and smooth the path to debt relief for heavily indebted countries.
However, China, as the biggest lender to the developing world, has been criticized for delaying the program’s implementation in Zambia and other countries.
Yellen acknowledged China’s concerns over why multilateral development banks do not have to take a haircut, and stated that these issues need to be worked through.
She emphasized the importance of being able to engage in a reasonable dialogue with counterparts in order to find a solution.
As the situation in Zambia continues to evolve, it remains uncertain as to what the next steps in the talks will be, and when a resolution may be reached.
The outcome of these discussions will be closely monitored as it has the potential to set a precedent for future debt restructuring efforts in developing nations.
