3 October, 2022

Zambia courts China as it puts its foreign debt in order

Zambian President Hakainde Hichilema set on fixing economy-Picture by bbc

Zambia is planning to hold detailed talks with China and other creditors as it tries to rebuild its economy after defaulting on its foreign debts in 2020.

Malawi’s western neighbour got a boost on its financial fortunes last week after securing a 1.3 billion dollar(£1.1bn) IMF bailout.

Zambia plans on holding “detailed talks” with China and other creditors as it tries to rebuild its economy after defaulting on its foreign debts in 2020.

“This IMF loan became necessary to help us get out of the debt quagmire… We are going to go into detailed negotiations with all the creditors, including China, to reduce the level of indebtedness and resume debt servicing,” said Finance Minister Situmbeko Musokotwane.

The Washington-based IMF says the bailout package will help “re-establish sustainability through fiscal adjustment and debt restructuring”.

The loan agreement includes “passing of a new law that will make it harder for any [future] government to borrow in a reckless manner”, Musokotwane said.

“We will also spend more money on social sector – including making education free and hiring more health workers and teachers,” he told the BBC’s Focus on Africa programme.

The government will also eliminate the fuel subsidy, but retain farm subsidies.

In 2020 Zambia became the first Africa nation to default repayment of of its foreign debt since the coronavirus pandemic. The country was already struggling with its $12bn external debt load.

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