Tuesday, June 18, 2024

China wants the World Bank to offer debt relief to Zambia

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China has called for multilateral development banks, including the World Bank, to offer debt relief to Zambia. China believes that the key to resolving Zambia’s debt crisis lies in the involvement of both multilateral financial institutions and commercial creditors in debt-relief efforts.

In a statement, the Chinese foreign ministry spokeswoman, Mao Ning, pointed out that multilateral institutions and private creditors hold the majority of Zambia’s foreign debt, accounting for 24% and 46% respectively.

“They combined hold the bulk of Zambia’s foreign debt. The key to easing Zambia’s debt burden thus lies in the participation of multilateral financial institutions and commercial creditors in the debt relief efforts,” she said.

China’s push for debt relief for Zambia is a clear sign of its determination to reform the global system for restructuring sovereign debt, which has traditionally excluded lending by multilateral banks. This stance may lead to increased tensions with the World Bank and further prolong the already drawn-out debt talks.

However, Mao has emphasized the importance China places on resolving Zambia’s debt crisis and its role in handling the country’s debt under the G-20 Common Framework, an initiative that brings together the Paris Club of traditional rich lender countries, private creditors, and China to restructure the debts of low-income countries on a case-by-case basis.

China has also highlighted the importance of Africa’s debt issue in the context of development. According to Mao, China’s financing cooperation with Africa has always been centered around enhancing Africa’s capacity for independent and sustainable development. She cited the example of the Kafue Gorge Lower Hydropower Project in Zambia, which was financed and built by China and has a total installed capacity of 750 MW, reducing carbon emissions by 663,500 tons per year. Mao believes that loans for projects like the KGL have helped to strengthen Zambia’s debt sustainability.

The Group of 20 leaders have emphasized the importance of private and official bilateral creditors providing debt treatments that ensure fair burden sharing. However, there is one member with “divergent views on debt issues” who “emphasized the importance of debt treatment by multilateral creditors like MDBs.” This could pose a challenge as the IMF Managing Director Kristalina Georgieva leads the effort to get creditors to agree on fixes to the Common Framework when the G-20 finance ministers and central bankers meet in Bengaluru, India, in February.

The Zambian debt talks are being closely monitored as they are seen as a test case for how sovereign debt restructuring will work in an era where China is the world’s largest sovereign lender and developing countries have issued dollar bonds to private owners. However, World Bank President David Malpass has rejected China’s call for debt relief, stating that there is no mechanism to do so and that this has already been actively discussed and rejected at the G-20. He added that it’s important for China to focus on reaching an actual debt restructuring that lightens the burden for Zambia.

Recently, US Treasury Secretary Janet Yellen visited Zambia and called China a barrier to resolving Zambia’s debt crisis. She has called on China to agree to a rapid restructuring of loans to Zambia and pointed out that many African countries are plagued by unsustainable debt, much of which is related to Chinese investments in Africa.

26 COMMENTS

  1. “….According to Mao, China’s financing cooperation with Africa has always been centered around enhancing Africa’s capacity for independent and sustainable development…”

    Not entirely true………..

    China was throwing money at PF government for useless roads and other none urgent projects………

    And others at overpriced costs……..

    That is how we got where we are……….

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    • I agree with you and there endgame on their part, was asset grabbing thats why they are reluctant to debt restructuring currently. The china had already earmarked strategic assests such as new mineral resource, airports, zesco and amny others. They did that with Sri Lanka and a port in Kenya, which they wanted to get as Kenya struggled to pay the debt. Chima has always had a game plan for AFrican countries to chock them with debt and then take over some assets.

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    • True – even using underhand fund transfer methods. And this she points that debt holders are private (46%), who likely are China’s briefcase business folks. It’s now clear why the US rep mentioned China as a stumbling block. China’s push back was at most childish, lecturing the US to focus on their broken economy. Nothing to do with the Zambian debt! In the meantime PF cadres who put the country in this position have been signing how the New Dawn is failing on debt relief negotiation. Never again will PF or PF alike should be allowed to lead the country.

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  2. Agreeing to peg the digital migration of zambias spectrum at $265 million in cahoots with the corrupt theiving lungu regime …………..

    Should have been not more than $160 million…….

    That Is just one example of how China is milking zambia dry………….

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    • Well you guys its time you came to terms with the fact that China holds the key to our debt relief efforts. No amount of insults or name calling as is your usual response to critics, will drive this away. Swallow your pride and unnecessary ego and face China directly instead of hiding behind America and the so called G20 framework.

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    • magaba

      China must understand that they don’t hold all the cards , and can not hold zambia to ransom…………

      China has a lot of their private citizens invested in zambia and a situation of hostility with Chinese citizens in zambia will not suit them………..

      China would have much more to lose

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  3. China is not a responsible lender………

    Far from it…………

    China gives some free handouts here and there, but……….

    But In the main, lock you in with irresponsible lending………..

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    • Who is…..Europe and America????? 70% of the foreign debt Zambia holds is European and American combined. Not China! And you seem to have swallowed the ANTI-CHINESE PROPAGANDA spewed by the Western media and Govts. If the Europe and America are really serious about forgiving Zambia/Africa’s debt, why don’t they start with the 70% debt that Zambia owes them. How does China figure into that part of the debt? I am sure they are waiting for the Rock Music Star, Bono, to ask them again. Hakahinde seems to have failed!

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  4. IMF and the World bank have been exposed on their intension to put Zambia in intensive care again by their persistence and bullying tactics. These institutions are well aware that $12 billion is such a small amount to settle but the real corruption is when you allow these foreign companies, creditors etc get away with the compounding techniques which hold our government to ransom. Zambia has been through IMF programs before and we know how this ended up. Why should we allow lenders who want us to pay their small debts 1000 times over? They do this with impunity and have the audacity to point fingers at our partners who are actually trying to help us unconditionally.

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    • Zambia’s total debt to China = 30% of total debt(not under IMF framework), Zambia’s debt to the rest under IMF framework = 70%. So the 70% gang want their money fast but instead of negotiating, they deflect attention and try to force China to write off its debt so that Zambia would concentrate on servicing the debt owed to them with strings attached. Now if our current government can’t see this then they don’t deserve to be where they are. I was pinning our hopes on the dribbling skills of our president but it looks like we have a striker with two left legs who keeps missing the goal. Clear scenario of “The grass suffering on the ground” when two elephants are battling it out.

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  5. Beggers are not choosers….this is what Zambians when you go out begging for Kaloba and yet you have enough resources within your own backyard….but the easy way is just begging bowl syndrome like it is with many African countries….Western countries survive on Taxes….but we choose to waste Taxpayers money on globetrotting in a private jet

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  6. UPND IS DEAD…JUST LOOK AT PRAISE SINGER SPAKA…NO WORDS AND HE CAN’T EVEN DEFEND HIS small god hh…blah blah blah blah spewing nonsense all day and night here on Lusaka Times…go out and find work Mr Spaka…do you even have money to buy new underwear or you just wash and wear the same underwear for 30 days straight

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  7. You brainwashed Zambians keep condemning PF for loans. Here is an educated Chinese woman reminding you just how clever Pabwato was: “loans for projects like the KGL have helped to strengthen Zambia’s debt sustainability.”

  8. Spaka has nothing to write because his boss is just at emphasising things that can’t be done. We are told to buy roller meal because breakfast is expensive and then the boss is too quiet that how minded can be we are teaching you a lesson 2026 be ready for a rude shock

  9. Spaka has nothing to write because his boss is just at emphasising things that can’t be done. We are told to buy roller meal because breakfast is expensive and then the boss is too quiet that how minded can be we are teaching you a lesson 2026 be ready for a rude shock. We are not dull as you people who say the truth

  10. We will rise again, even if we lose some to the struggle. Even the critics will be happy. We had anticipated this. That is why Finance Minister was first appointment and the first task was debt restructuring. Its not a walk in the park. This is when those we kicked out are having a blast, yet its them who borrowed heavy. You can see through such characters. Mmembe is now Chinese ambassador to Zambia, he still holds his Zambian passport…..kikiki With a begging bowl. Cuba is bankrupt, also begging from China……..hahaha

  11. “loans for projects like the KGL have helped to strengthen Zambia’s debt sustainability.”
    What sustainability?….Kafue Gorge lower was built at over double the actual cost. Putting Zambia in more debt.
    How do you explain this
    Kafue Gorge lower dam ……750MW at cost of $2,1 billion
    Julius Nyerere dam …………2,115MW at cost of $2.9 billion

    KGL should have been built at around $900 million going by what Tanzania spent.

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  12. The USA, CHINA cold way has now came on the zambian soil, next USA will respond. this is how the west destabilize same very already weak economies like zambia.let us wait and see

  13. The USA, CHINA cold war has now came on the zambian soil, next USA will respond. this is how the west destabilize same very already weak economies like zambia.

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