President Hichilema Vows Not To Favour Chinese Creditors In Restructuring

Zambia's president has pledged not to favour Chinese creditors over western bondholders in his efforts to resolve the country's financial crisis.

Zambia's debt troubles resulted in the continent's first sovereign default since the epidemic in 2020. Lusaka is restructuring $15 billion in external loans in order to get a $1.4 billion IMF loan. Negotiations with creditors are expected to begin in the coming weeks.

The reorganisation is considered as a litmus test for China's willingness to tolerate losses from a recent spike in loans to Africa. In 2016, Chinese loans to Africa reached a high of slightly under $30 billion.

In an interview with the Financial Times, Hakainde Hichilema said, "We want to resolve the debt situation - it needs to be resolved." "It's good for Zambia, it's good for creditors, since we were in a no-win situation when we took office." "No one was benefiting.”

Last month, the head of the Paris Club group of wealthy creditor nations cautioned that China's growing dominance as a lender to impoverished countries was discouraging them from seeking debt relief.

About $6 billion of Zambia's debt is owed to Chinese creditors, who aided in the financing of a spending binge that ended in crises under Edgar Lungu.

Hichilema defeated Lungu in a landslide election last year, but he maintains he inherited a near-empty treasury as a result of years of corruption. His government reached an agreement with the IMF in principle in December, which it hopes would serve as a springboard for talks with creditors.