Creditors hope to propose a debt restructuring plan for Zambia this week, a source within the Paris Club of official creditors said Monday, after months of hold-up.
The United States has accused Zambia’s biggest creditor China — which according to financial researchers is owed $6.6 billion — of dragging its feet.
The African nation in 2020 became the first on the continent to default on its foreign debt — estimated at $17.3 billion — since the start of the Covid-19 pandemic.
Zambia has since sought help to restructure its debt through a G20 mechanism, which is co-chaired by Paris and Beijing, but implementation has been slow.
The Paris Club is an informal group of official creditors whose role is to find solutions to countries’ difficulties in repaying their debt.
The group will meet Wednesday, a day before an international summit also in the French capital, which aims to find ways to reform global financing for a new era shaped by climate change.
“I think we have done our work at a technical level, now it’s a question of ironing out the last details and being ready to make an offer to Zambia,” the source, who spoke on condition of anonymity, said.
“We are hopeful we can make an announcement during the summit,” the source added.
“The president of Zambia will be there, the prime minister of China will be there, numbers of creditors from the Paris Club will be there, so hopefully we can be in a position to offer a debt treatment to Zambia.”
“We are close to the finish line,” the source said.
Zambian President Hakainde Hichilema told AFP in an interview last month that the debt is “like a python around our necks, ribs and legs”.
In April, International Monetary Fund managing director Kristalina Georgieva said that she had been given fresh assurances during a trip to Beijing that China supported a debt restructuring programme for Zambia.
Negotiations on restructuring Zambia’s debt — a key step towards unblocking the IMF’s aid plan for the country — have been under way for two years.