Zambia to seek restructuring of debt to China after IMF warning

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Zambia’s cabinet approved plans to restructure the country’s loans from China after the International Monetary Fund said the country was at high risk of debt distress.

The government will also source financing directly from Chinese lenders rather than through contractors in a bid to cut the cost of borrowing, the presidency said Tuesday in an emailed statement.

Zambia’s external debt grew to $7.6 billion, or 29 percent of gross domestic product, by the end of August, according to Finance Ministry data, a situation that prompted a warning in October from the IMF.

While $3 billion has been raised in Eurobonds since 2012, the bulk of the new foreign debt is from Chinese state-owned companies and has gone to building roads, airports and power plants.

The government has earmarked more than 10 percent of its 2018 spending to go toward servicing foreign loans.

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26 COMMENTS

    • I feel like suing on behalf of Zambians. You can’t call that “Zambian Cabinet”, it is a “PF-MMD Cabinet”,…. Zambia myfoot!!

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    • Ati “government will also source financing directly from Chinese lenders rather than through contractors in a bid to cut the cost of borrowing”
      It’s you who want to borrow, hence you can not attach any condition. You are just saying you will source directly from the banks in order to fool Zambians and make them believe you are negotiating lower rates. Why were you not borrowing from the banks directly, until now? Chinese Banks are not stupid to lend a high-risk country, it seems Zambia has no good financial plan, so even the Chinese banks will reject or lend at a higher cost. Don’t cheat your selves, those loans will still be expensive

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  1. Zambians we warned you back in 2011 about putting these poor managers of the economy in charge.

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    • Very incompetent stewards indeed. How do you entrust your wealth to managed by such appalling souls. So disgusting.

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    • Restructuring means more money at higher interest …they failed to obtain from IMF now they are going to obtain at higher interest because they didnt invest wisely. They never learn these foooools

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    • it’s an illusion to assume they will get cheaper loans by borrowing from the banks directly. The problem is they have no proper financial plan, they are just focused on what to what to borrowing without plans on how to repay back.
      Chwii chwiii mentality

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    • To some hateful people ECL may be a town mouse entrusted with nshaba. An unfair label, of course. But just how do you entrust a bush mouse with PRIVATISATION? Look where it has landed us. So let town mouse take care of things. He is better able.

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  2. Read again the debt is not being restructured, original debts will stand, just new borrowings will supposedly direct wth chinese state controlled banks rather than state controlled contractors.. lets see if china will permit. They always direct thru their contractor.

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  3. China increased its holdings of U.S. Treasuries last year by the most since 2010, in a signal its demand for American debt remains resilient.
    The value of China’s holdings of U.S. bonds, notes and bills rose by $126.5 billion to $1.18 trillion in December from a year earlier, according to Treasury Department data released Thursday in Washington. China remains the largest non-U.S. holder of debt followed by Japan, whose holdings fell for the fifth straight month in December, to $1.06 trillion after ending 2016 at $1.09 trillion.
    China’s Treasury holdings are coming under extra scrutiny after a signal earlier this year that America’s largest creditor may be easing bond-buying amid rising trade tensions.
    Chinese officials said last month that as part of a foreign-exchange review, the…

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  4. government is considering slowing or halting purchases of U.S. Treasuries as they became less attractive relative to other assets. A pullback could complicate plans by the U.S. to ramp up borrowing to finance widening budget deficits and efforts by the Federal Reserve to limit market turbulence from gradually unwinding its balance

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  5. What have we done…??? economically enslaved, these business men the so called leaders are out of control.

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  6. Barrick Gold (TSX, NYSE:ABX) is giving Tanzania a 16% stake in three gold mines operated by its subsidiary Acacia Mining (LON: ACA) and a one-off payment of $300 million (£227.6 million) to resolve a dispute that has hit its operations in the country.

    Chairman John Thornton said the agreement also includes a 50:50 partnership between the government and Acacia Mining to share revenues from all the mines the company runs in the east African nation.

    Deal doesn’t cover whether an export ban on concentrates affecting Acacia will be lifted, or if the miner will have to pay $190bn in outstanding tax claims.
    “A partnership requires trust between the parties, and transparency is the currency of trust,” Thornton said in the statement. “Through our discussions over the last three months we…

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    • Coz we have a bunch of jokers as leaders. That’s the price we all have to pay for having a poorly informed electorate who get carried away by campaign music shows.

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    • @11 Mayaba, We CAN”T go the Mugufuli way because at the moment we are LACKING PATRIOTS IN BOTH THE RULING AND OPPOSITION PARTIES!! Just before Sata died, Chikwanda had increased taxation on Mines, when mines threatened closures in 2015 , UPND and FDD sided with mines! To date NONE OF THE POLITICAL PARTIES HAS TOLD US HOW THEY WILL OR CAN MAXIMIZE REVENUE FROM MINES apart from empty rhetoric, at the end of it they are JUST WISHING TO GET INTO POWER AND COLLECT BRIBES FROM THE SAME MINES!! We HAVE REALLY LOST IT!!

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  7. Ati “government will also source financing directly from Chinese lenders rather than through contractors in a bid to cut the cost of borrowing”
    It’s you who want to borrow, hence you can not attach any condition. You are just saying you will source directly from the banks in order to f..o.ol Zambians and make them believe you are negotiating lower rates. Why were you not borrowing from the banks directly, until now? Chinese Banks are not st.up.id to lend a high-risk country, it seems Zambia has no good financial plan, so even the Chinese banks will reject or lend at a higher cost. Don’t cheat your selves, those loans will still be expensive

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  8. Be careful! Hazaluza Hagain! “UPND Presidency is for Tongas!” they have said openly before. So all the arguments they present here are not of substance but out of tribal inclinations.

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  9. In other words our government lacks capacity to understand the seriousness of the situation, they had to be told by IMF!

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  10. Not long ago we had govt officials telling us the debt stock was within reasonable limits. What they forget is that this debt isn’t denominated in kwacha and they therefore always look at it at today’s exchange rate. This is narrow-minded as the same debt can easily escalate in the event of the kwacha sliding as it is always bound to do. This problem dogs all poor nations as they are unable to borrow from abroad in their own currencies.

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  11. The IMF want to help Zed by lending money and zed must repay but can’t because of ova borrowering. China’s policy is just give then so China take control of Zed’s land and minerals and it’s economy.
    Chinese want to take ova Zed just like they have done to Canada.
    Let’s think about our children living with this nightmare!!!
    U people in government are lining you pockets at the expense of Zambian.

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