Zambia is in talks for the restructuring of its $11 billion external debt, even as prices of copper, its main foreign exchange earner, continue to fall amid the coronavirus crisis. This has led to a collapse in the value of the Zambia Kwacha and further erosion of its foreign reserves, making US dollar debts even harder to bear.
Financial Times reports that the country’s unsustainable debts have long blocked it from receiving loans and oversight from the International Monetary Fund (IMF), which leaves it more vulnerable. IMF maintains that countries which already had unsustainable debt levels before the crisis must first engage creditors to show debts can be managed before it will consider any assistance.
Even before the pandemic, Zambia was struggling to keep up with payments on its Chinese loans and US dollar bonds, which each represent roughly a third of Zambia’s external debt. Both kinds of loans lie outside the Paris Club of bilateral government creditors that have traditionally led debt relief for poorer nations.
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Figures compiled by the Zambia-focused Institute for Research and Analysis show that the country’s repayments to creditors outside the Paris Club surged by more than 1,300% between 2012 and 2019 to about $600 million last year.
Last year, it made $143 million in repayments to China’s Exim Bank, up from $23 million in 2012.
Other countries which have initiated debt restructuring measures include Kenya, Rwanda, and Angola.
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