China has delayed Zambia’s debt restructuring plans with requests to have the country’s local-currency debt held by foreigners included in a deal that could set a global precedent, according to a senior US Treasury official.
According to a report by Bloomberg, China, whose creditors hold more than a third of Zambia’s dollar debt, has repeatedly been blamed for holding up progress in the revamp of debt owed by Africa’s first pandemic-era sovereign defaulter, whose external liabilities topped $17 billion.
Reworking local-currency debt isn’t feasible and would leave the south African nation with a more unaffordable burden down the line, the Treasury official said on condition of anonymity.
When the southern African nation defaulted in 2020, it said that it would only restructure external debts. The IMF warned last year that a revamp of local-currency obligations could trigger significant financial instability.
The Chinese embassy in Lusaka, Zambia’s capital, denied it has delayed the talks and urged the US to stop sabotaging other nations’ efforts to solve their debt issues without providing further details.
“China has been active in co-chairing Zambia’s official creditors’ committee under the G-20 Common Framework and working hard with other parties to seek a sustainable solution in line with the principle of common actions and fair burden-sharing. China’s efforts have made some positive progress.” the embassy said in a statement responding to questions.
Beijing also wants multilateral development banks to take losses in restructurings, including in Zambia, the official said.