Zambia lobbying for creditors to meet as restructuring drags

By Chris Mfula

LUSAKA (Reuters) -Zambia is lobbying for its official and private creditors to meet to resolve their differences over a restructuring proposal for $3 billion of international bonds, its president said on Friday.

In a major setback for Zambia, official creditors, which include China and members of the Paris Club of creditor nations, last month rejected a preliminary deal to restructure the Eurobonds.

The official creditors argued that the deal with bondholders, which was approved by the International Monetary Fund, did not offer comparable debt relief to what they were offering.

Zambia’s President Hakainde Hichilema told a news conference that he had spoken with French President Emmanuel Macron about his country’s slow progress in restructuring negotiations during the COP28 climate summit in Dubai.

Explaining why official creditors had rejected the deal, he said on Friday: “Some official creditors felt that the private creditors were not yet at par with them”.

Debtor countries are meant to agree comparable restructuring deals with official and commercial creditors under the G20’s Common Framework process, which was established in 2020 in response to the COVID-19 pandemic.

Hichilema added that 98% of official creditors had signed a memorandum of understanding on debt restructuring.

Zambia was the first African country to default on its debts during the COVID-19 pandemic, and its restructuring efforts have been hampered by repeated setbacks.

Further delays could erase the economic gains Africa’s second-biggest copper producer has made, Hichilema told reporters.

“There are investors saying is this (the debt restructuring) going to happen? The delays are giving a push on inflation,” Hichilema said.

Zambia’s kwacha currency has been hitting record lows against the dollar since last month, fuelling price pressures.

(Reporting by Chris Mfula; Writing by Bhargav Acharya; Editing by Alexander Winning, Rachel Savage and Tomasz Janowski)