Zambia and its government creditors, including China, have reached a deal to restructure $6.3 billion in loans, the French government announced Thursday on the sidelines of a global finance summit in Paris.
The agreement covers loans from countries including France, the UK, South Africa, Israel and India as well as China — Zambia’s biggest creditor at $4.1 billion of the total. The deal, announced by officials who spoke anonymously in accordance with the French government’s customary practices, may provide a roadmap for how China will handle restructuring deals with other nations in debt distress.
The International Monetary Fund approved the deal, meaning it’s going to allow Zambia to receive more financing from the institution, the French said. A representative from the IMF did not immediately respond to a request for comment.
The Zambia deal came at a summit with more than 50 world leaders, finance officials and activists to discuss ways of reforming a global financial system to better help developing nations struggling with debt, climate change and poverty.
Zambia — the continent’s biggest copper producer— became Africa’s first coronavirus-era sovereign nation to default when it failed to make a $42.5 million bond payment in November 2020. The debt has prevented the democratic nation from developing economically and taking on new projects. Experts have said such prolonged debt crises can send nations deeper into poverty and joblessness and exclude them from the credit they need to rebuild.
U.S. Treasury Secretary Janet Yellen, who is attending the summit, welcomed news of the Zambia deal. She visited Lusaka in January to meet with Zambian President Hakainde Hichilema and bring attention to the ramifications of its debt crisis.
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