Exclusive-Chad creditors to issue statement on contingent debt relief deal, source says

By Andrea Shalal and Jorgelina do Rosario

WASHINGTON (Reuters) – Chad’s creditors expect to announce a contingent debt relief agreement with the African country later on Thursday, in what would be the first debt treatment under a G20 framework agreed in late 2020, a source with knowledge of the talks told Reuters.

Together with Ethiopia and Zambia, Chad was one of three initial countries to seek a debt restructuring under a G20 initiative.

“We have an agreement that we will do things in order to relieve Chad – if need be,” the source said, adding that the agreement included Switzerland-based mining and commodity firm Glencore (OTC:), a major creditor, which was seen as a “huge step.”

“They don’t really need debt relief at this stage, but we’re ready to do things, in particular in 2024,” the source said, speaking on the sidelines of the annual meetings of the International Monetary Fund and World Bank in Washington.

Although Chad is currently benefiting from high oil prices, economists and experts say both government and private-sector creditors must be ready to act in case debt servicing conditions become more difficult for the country.

That could happen in 2024, the source said, when Chad will face a high level of debt service payments.

Chad’s finance minister welcomed the cooperation with the G20 framework and the IMF during a meeting that brought together African finance ministers and Group of Seven officials on Wednesday, the source said.

Progress on the G20 framework, agreed together with the Paris Club of official creditors, has been glacial with the United States, Spain and other G20 members taking aim at China, the biggest creditor to many African countries, for dragging its feet on reducing countries’ debt burdens.

Chad’s debt-relief discussions under the G20 framework have been led by the Paris Club and Saudi Arabia.

A French finance ministry source on Monday said the creditors were close to a deal.

The source said discussions were continuing with Zambia, whose finance minister also participated in the G7 meeting with African finance ministers, an event coordinated by current G7 president Germany.

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