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Alba Iulia
Thursday, November 26, 2020

Zambia clinches major debt deal with China

Economy Zambia clinches major debt deal with China

Zambia says it has reached a deal to defer debt repayments that were due in October on a loan from the China Development Bank (CDB). Zambia owed CDB about $391m at the end of 2019 — about a tenth of the $3bn it owes Chinese entities — according to the finance ministry.

It was not clear whether the loan in question covers all of this debt or a fraction of it. China holds about a quarter of Zambia’s foreign debt.

“The Government is very pleased to announce that it has reached an agreement with the China Development Bank to defer debt service in respect of a commercial loan facility insured by Sinosure. Under the terms of our agreement with CDB, interest and principal due on 25th October 2020 will be deferred,” said Treasury Secretary Fredson Yamba said.

Mr Yamba said the deferred interest payment is now payable on 25th April 2021 and the deferred principal rescheduled over the life of the facility.

“Reaching this agreement is an important milestone for Zambia in our debt relief efforts. This was made possible thanks to CDB’s and Sinosure’s collaborative and cooperative approach. We will continue to work with all of our creditors to reach similar interim agreements around deferral of principal and interest payments.”

Mr Yamba added, “Such interim debt service deferment agreements will provide the Government with the necessary time to focus efforts on completing its overall debt strategy aimed at restoring public debt sustainability.”

The government missed a $42.5m coupon payment on one of its Eurobonds that was due on October 14 but has a 30-day grace period before it goes into default.

It has asked Eurobond holders to defer interest payments until April 2021, but they have so far rejected the request.

One of the sticking points has been whether other key lenders such as China would also agree to reschedule repayments.

“This is a good step in the right direction but they still need to do more to appease the creditor group,” said one of the members of the Zambia External Bondholder Committee, Kevin Daly at Aberdeen Standard Investments in London.

“It is still piecemeal and what you need is something comprehensive.”

He also said it was not clear whether the announced deal included a deferral of arrears payments believed to have become an obstacle to some Chinese entities participating in debt relief for Zambia.

Zambia’s external debt is nearly $12bn, including $3bn of outstanding Eurobonds, $3.5bn of bilateral debt, $2.9bn of other commercial debt and $2.1bn owed to multilateral institutions.

25 COMMENTS

  1. Manje imwe muzakululukilako banzanu liti? Your friends budget for aid and loans that they will disburse. Imwe ni balance of payment support and dubious infrastructure loans — and then covid appeals for debt service relief! Wake up bane!

  2. It won’t be long before China owns all of Zambia – thank you so much ECL for selling out our country! Shame on you!

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  3. That’s an economy on an oxygen ventilator. Please tell us how you going to raise that payment between now and April consideration there is no fundamental changes on economical activities actually things are getting worse month by month. I hope you are not going to borrow from John to pay Paulo.

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  4. Our partners in development. China is a real partner who is conscious of what is happening to the global economy. Not those blood sucking westerners praying that we default. Thank you, China.

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  5. So, was this done by Lazard?? by the way, April 2021 isn’t that far away . .this is just kicking the can further down the road while contracting more debt. Bane, we are in maningi trouble.

  6. This temporary relief is always welcome. But what concrete and irrevocable undertaking is being made btwn now and April to ensure that we earn our creditors’ trust for good by paying all that will pile up?

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  7. Dig one big hole in order to bury another. Eventually you have to dig round the whole field and get very very tired indeed. Negotiations are also costly and the negotiators enjoy the proceedings. From salaries of civil servants to technical advisors. Shifting interest payments to possible allowances and fees and maybe flight charges etc.

  8. Sri lanka was in the boat a few years ago. They struggled to make loan repayments for the $7billion debt used to build a major seaport.
    Eventually they just gave their main sea port to China for the next 100 years.

  9. This is no doubt a welcome step taken by the CDB. Now the economy of Zambia can hope for relief amidst the Covid19 turbulence.

  10. In nearly 10 yrs no debt-repayment strategy was worked out and there was no crisis. Now under crisis and in 6 months we’re going to work it out somehow. Good luck, Zambia. I want this to work out.

  11. I still don’t understand how we are letting this fool to be selling our country while we are looking. Where does the revenue collected through PAYE and corporate tax from mining companies go? Wake up Zambia, we are being lead by thieves.

  12. It’s a bit of a generalisation, but Chinese people often do like to gamble. Personally I don’t gamble, but I’m willing to take a bit of a chance on Zambia. Development in Zambia is a good bet!

  13. Lungu and his PF makaka Bandit have officially handed over Zambia to the Chinese….Zambia sold…..wait till April 2021

  14. Zambia is kicking the can down the road. Our children will find that debt, fail to pay for it and will opt for colonisation

  15. It may sound abundantly a relief ? but agony is the fact that you will have to pay back.
    Villagers in PF are dancing and sipping expensive whisky and wine but they have sold Zambia to one of the worst creditors on this planet. (China). Western world may sound or mean they dont care but they know a corrupt government is a danger to its stability, economically, socially, politically, tranquility and becomes afraid ro leave office because the fear of facing the institutions of governments they have been abusing to go after those perceived as enemies. Financial discipline is a key to a stable and enabling institutions of government and the government it self.
    Because you are friend to leave you resort to tribalism like siliya , insulting basata sure ?

  16. It may sound abundantly a relief ? but agony is the fact that you will have to pay back.
    Villagers in PF are dancing and sipping expensive whisky and wine but they have sold Zambia to one of the worst creditors on this planet. (China). Western world may sound or mean they dont care but they know a corrupt government is a danger to its stability, economically, socially, politically, tranquility and becomes afraid ro leave office because the fear of facing the institutions of governments they have been abusing to go after those perceived as enemies. Financial discipline is a key to a stable and enabling institutions of government and the government it self.
    Because you are friend to leave you resort to tribalism like siliya , insulting basata sure ?

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