April 19th, 2024
Courtesy of the Wall Street Journal, a report on Zambia’s decision to move on from its earlier reliance on China’s debt:
Zambia’s is ready to move on from a failed economic development model based on borrowing billions of dollars of debt from creditors like China, the country’s finance minister said.
“The level of debt that Zambia acquired from China was way, way too high,” Minister Situmbeko Musokotwane said in a Thursday interview.
Zambia has been negotiating a $17 billion debt restructuring with creditors including China and Wall Street bondholders since November 2020, the outcome of which is widely seen as a bellwether for how Beijing will act now that it the biggest lender to developing countries, outweighing Western powers that dominated such matters for more than 50 years.
Infighting among creditors has led to delays. China has often dragged its feet in debt negotiations and blocked bondholders’ deal to salvage their investments in defaulted Zambian debt. China relented in February, paving the way forward for the country to exit default and emerge from its three-and-a-half year debt restructuring.
“The Chinese have cooperated and agreed to get this data to be restructured so that we can move forward,” Musokotwane said. “The financial stigma of Zambia being a defaulter is now going away.”
Zambia is pushing forward on public-private partnerships to finance infrastructure development, including two highway projects that are nearing completion, Musokotwane said.
The country is also soliciting investors to help develop a roughly 500-kilometer railway between Zambia’s copper-rich northern regions to the Angolan port of Lobito.
“Already you can see that we are removing debt from our development model,” he said.
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