Finance Minister Situmbeko Musokotwane urged other African nations considering using the Group of 20’s Common Framework mechanism to restructure unaffordable debt to act quickly.
Africa’s first pandemic-era sovereign defaulter has been using the template to rework external liabilities totaling $12.8 billion.
In recent weeks, Nigeria and Ghana have announced they’re considering revamping their liabilities.
Rising interest rates and a surging dollar may push more nations into default as they struggle to pay for imports from fuel to food.
The Common Framework is the best option for governments of poor countries, even though progress has been slow, Musokotwane said in an interview.
“I would encourage my colleagues from the other African countries not to hesitate but to come forth and get their problems solved,” he said in Washington, where he’s attending the World Bank and International Monetary Fund annual meetings.
“This is the only viable option as of now that is available for countries to resolve their debt unsustainability.”
Musokotwane’s endorsement comes after criticism that the process has moved too slowly.
Zambia has been struggling to complete a complex debt restructuring since starting the process more than two years ago.
The nation has secured a crucial $1.3 billion IMF assistance package and received assurances from a committee of bilateral creditors that they’re willing to negotiate, but is yet to agree on the broad terms of any deal.
The government also needs to bargain with holders of its outstanding $3 billion in eurobonds, along with other commercial creditors.
“We are pushing as hard as we can” to sign a memorandum of understanding with the official bilateral creditors, Musokotwane said.
“I will be very delighted if it can happen before the end of this year.”
Zambia’s restructuring is a test case for how Chinese creditors will negotiate together with other bilateral lenders and bondholders.
The government is one of three globally to use the G-20 framework as a coordinating mechanism to rework liabilities. Chad and Ethiopia are the other two.
Chinese lenders account for more than one-third of Zambia’s external debt, according to the finance ministry.
The government isn’t seeking to rework all of its dollar liabilities, including those owed to multilateral development financial institutions, the ministry said on Oct. 7.
“We are comforted by the fact that there is commitment and everybody realizes that this is really the way,” Musokotwane said. “There is no other way for Zambia to follow if we’re to get to debt resolution.”
The nation hopes to hold its third official creditors committee meeting “in weeks rather than months,” he said.
Zambia last week said it needs external creditors to reduce the net-present value of their loans by $6.3 billion, or 49% of the face value of the $12.8 billion foreign debt the government is trying to restructure.
Negotiations over the relief are yet to start and preparations are underway to plan for the meetings, the finance minister said.
More key quotes from the interview:
• On the Common Framework: “For us, it has moved us from a situation where one year ago things appeared gloomy to now, where there’s so much interest and optimism about what is happening in Zambia. That gives me hope that we are headed in the correct direction.”
• On timing for concluding debt restructuring: “We’ll continue to push very hard so that if it happens before the end of this year, well and good. If it happens in the next quarter, we will not be very happy but at least we’d have moved. But we will continue to push as hard as possible so that we achieve this as quickly as possible.”
• On Zambia requesting a 49% reduction in net present-value of the debt it’s seeking to restructure: “We are mindful of the fact that this is what’s required to do the job properly.”
• “The process to resolve this debt issue is obviously a very important one. This is really a step into the future, also, to resolve the issues of the economy and make Zambia once more a respectable participant in the world economy.”
Look at this old fossil even campaigning on behalf of his western masters. He has become a mere sale person for them.
After putting us in this situation, you are here insulting those who’re trying to solve the problem ?
We are in safe hands with this man
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