Zambia's debt restructuring pain paves way for others - president

Zambia's deal to restructure debts owed to other governments will make it easier for other countries to win relief from their debt burdens, President Hakainde Hichilema said in an interview on Friday. Zambia's government creditors announced on Thursday that the southern African country had struck a deal to restructure $6.3 billion, ending months of protracted discussions since it defaulted in 2020.

Zambia's deal to restructure debts owed to other governments will make it easier for other countries to win relief from their debt burdens, President Hakainde Hichilema said in an interview on Friday.

Zambia's government creditors announced on Thursday that the southern African country had struck a deal to restructure $6.3 billion, ending months of protracted discussions since it defaulted in 2020. Zambia is viewed as a test case for a debt restructuring framework backed by the Group of 20 wealthy nations and intended to streamline relief for countries caught in a developing world debt crisis sparked in part by the pandemic.

While Ghana and Ethiopia also await debt relief under the programme, Zambia's slow progress has kept other struggling countries from seeking restructurings under the mechanism. "We expect that other debtor countries now will be able to run through their restructurings much quicker," Hichilema told Reuters.

"I think that's important. Zambia's pain can now assist others to do it better," he said, speaking a day after the deal was announced at a summit in Paris about reducing poor countries' debt burdens and freeing up more cash for climate finance. The Zambia agreement calls for its debt to be rescheduled over more than 20 years with a three-year grace period during which only payments on interest are due.

Some Western officials have repeatedly attributed Zambia's lack of progress until now to China, its largest creditor, dragging its feet. "It is a fair assessment from the outside, but I don't think it's a fair assessment from the inside. It wasn't just China, everybody was figuring out what to do, including Western creditors," Hichilema said.

China has become a major creditor for many African countries after lending heavily for years, although until now it has had little experience with complicated debt restructurings. Apportioning blame to one creditor or another was an exercise in futility, Hichilema said.

"If China didn't want to do it, it wouldn't have happened," he said.

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