05 Feb 2021
Zambia has been sent to default after its debt continued to rise during the coronavirus pandemic. The African country has now requested a restructuring of its debt under a new framework supported by the Group of 20 major economies.
Countries could have made use of the G20’s Debt Service Suspension Initiative (DSSI), which would offer temporary payment relief on debt owed to official creditors.
Zambia’s finance ministry noted that debt treatment within the framework will be based on the debt sustainability analysis. This comes ahead of the talks with the International Monetary Fund (IMF) about a relief program, which will take place next week.
Finance Minister Bwalya Ng’andu said, “Our application to benefit from the G20 Common Framework will hopefully reassure all creditors of our commitment to such treatment.”
The common framework will see all G20 and Paris Club creditors taking part.
Moreover, analysts said, “It makes sense for them given what the common framework is and the exposure of the Chinese in Zambia. The key remains making progress towards resolving the default and moving towards an IMF program with a credible macro framework.”
Reuters claim that Zambia owes around $3 billion to China and Chinese entities. In addition, “It owes $3.5 billion in bilateral debt, $2.1 billion to multilaterals and $2.9 billion to other commercial lenders.”