Zambia open to all restructuring options to get creditors on board
Zambia is open to discussing all options that will make its plans to restructure its debt more acceptable to creditors, the finance ministry said.
Africa’s first pandemic-era sovereign defaulter is seeking to revamp $12.8 billion of its external liabilities that reached nearly $17.3 billion at the end of 2021, and has asked creditors to reduce the present value of their debts by 49%.
That quantum is what the International Monetary Fund and World Bank required in their Debt Sustainability Analysis that sets out the parameters for the reorganization, it says.
“The government appreciates that the efforts being asked of creditors are significant, and is ready to discuss and explore all restructuring options that would make this effort acceptable for creditors, including private creditors,” the finance ministry said in reply to emailed questions Thursday. “We see positive progress in our discussions and are hoping to reach a deal in early 2023.”
Zambia is seen as the biggest test to the mechanism that the Group of 20 most powerful nations conceptualized to help poor countries reorganize unaffordable debts in the wake of the pandemic. The so-called Common Framework attempts to bring traditional Western lenders to the same negotiating table as new ones such as China — now the biggest creditor to emerging nations.
Progress has been slow, and at least one other country needing relief is cautious of using the mechanism for fear of similar delays.
“We are actively engaged in intensive and productive discussions with all our creditors,” the finance ministry said in reply to a question about whether the size of relief it’s seeking was a stumbling block.
“We need to ensure that the debt relief provided is in line with the debt-sustainability analysis targets.”
Working sessions and information exchanges with the official creditors committee occur regularly to prepare for the next meeting, according to the ministry.
