Zambia on monitor for debt restructuring subsequent quarter -finance minister

Angelena Iglesia
  • Pandemic, financial mismanagement led to sovereign debt default
  • Zambia’s exterior debt value round $15 billion
  • China in search of readability on IMF debt reduction parameters

JOHANNESBURG, Nov 30 (Reuters) – Zambia is pushing laborious to finish the restructuring of practically $15 billion of exterior debt within the first quarter of 2023 and is “in lively engagement” with its largest bilateral creditor China, Zambia’s finance minister mentioned in an interview on the Reuters NEXT convention.

Zambia defaulted on its sovereign debt in 2020 and the present authorities, which took energy final yr, has been on a quest to restructure its loans and rebuild an economic system ravaged by mismanagement underneath earlier administrations and COVID-19.

In August, Zambia received Worldwide Financial Fund (IMF) approval for $1.3 billion, three-year mortgage programme to assist it restructure money owed which the federal government mentioned stood at $14.87 billion on the finish of June 2022.

Zambia’s Finance Minister Situmbeko Musokotwane advised Reuters China had sought clarification from the Zambian authorities and the IMF on their debt settlement, he mentioned.

“The Chinese language… are asking (for) quite a lot of clarifications, which us and the IMF are offering them,” Musokotwane mentioned.

China desires extra readability on the IMF assumptions on which the mortgage programme relies, he mentioned, since these are supposed to kind the idea of the restructuring negotiations between Zambia and all its collectors.

An IMF spokesperson mentioned China and different official collectors have had quite a lot of technical questions since its workers report and Debt Sustainability Evaluation for Zambia’s programme request have been printed.

“This technical due diligence is presently ongoing. Fund workers is making an attempt to facilitate that course of in order that technical points might be resolved and negotiations can proceed to progress,” the spokesperson advised Reuters.

TEST CASE

Zambia’s much-delayed debt restructuring is seen by analysts as a check case for what are anticipated to be a spate of defaults in poorer nations which have borrowed closely not solely within the capital markets but additionally from nations together with China.

IMF technique chief Ceyla Pazarbasioglu mentioned Zambia’s debt restructuring was the true check case for the Frequent Framework, arrange in late 2020 by the Group of 20 main economies.

On the finish of 2021, Chinese language collectors accounted for nearly $6 billion of Zambia’s exterior debt, which was then $17.27 billion.

Zambia’s authorities mentioned earlier this month that the Export-Import Financial institution of China (EximBank) was representing China on the bilateral ‘official collectors committee’.

Requested whether or not EximBank was additionally representing Chinese language business collectors, Musokotwane mentioned EximBank is “the lead negotiator for the Chinese language pursuits”. Zambia’s Chinese language collectors embrace business banks akin to Industrial & Industrial Financial institution of China (601398.SS), Jiangxi Financial institution (1916.HK) and China Minsheng Financial institution (600016.SS).

China’s Ministry of Overseas Affairs didn’t instantly reply to a request for remark.

Musokotwane added personal collectors have been cooperating properly in debt reduction discussions and there had been a bondholder assembly this week.

Zambia’s authorities mentioned in October it wants a gift worth debt discount by 2027 of $6.3 billion, or 49% of the debt being restructured, to satisfy IMF targets, a degree some worldwide bondholders have beforehand mentioned can be unacceptable.

COPPER MINING

Musokotwane additionally mentioned he hoped to make an announcement by the primary quarter of subsequent yr about potential new traders in Konkola Copper Mines (KCM) and Mopani Copper Mines (MCM).

“We hope that by first quarter of subsequent yr we ought to be there with a few of them. And likewise a number of the new investments which are coming from the U.S. and different locations,” he mentioned.

Zambia’s earlier authorities put KCM into liquidation in 2019, triggering a authorized dispute with its mum or dad firm, Vedanta Assets, that’s now being settled out of courtroom.

Zambia’s state-owned mining firm ZCCM Investments Holdings (ZCCM.LZ) took over MCM in 2021 from commodities big Glencore (GLEN.L), which mothballed its operations in 2020 attributable to weak copper costs.

The federal government is aiming to treble copper manufacturing to three million tonnes per yr inside the subsequent decade in Africa’s second largest producer of the mineral.

To view the Reuters NEXT convention stay on Nov. 30 and Dec. 1, please click on right here.

Reporting by Rachel Savage and Bhargav Acharya; Extra reporting by Nelson Banya in Harare; Modifying by Alexander Profitable, Raissa Kasolowsky and Lincoln Feast.

Our Requirements: The Thomson Reuters Belief Rules.

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