Zambia confirms it has agreed debt restructuring with official creditors

LONDON (Reuters) -Zambia on Thursday confirmed it had agreed a debt restructuring deal with its official creditors, adding it would now seek a quick agreement with its private creditors as well.

The deal was announced earlier by a French official, who said Zambia’s public sector creditors had agreed to reschedule $6.3 billion of payments and that private sector creditors were expected to do the same on $6.8 billion owed to them.

Zambia’s President Hakainde Hichilema wrote on Twitter that the deal would help attract investment and create jobs.

Zambia’s finance ministry said in a statement that official creditors had agreed that local-currency debt would be excluded from the deal.

It also said the terms of the agreement with official creditors could be adjusted if Zambia’s debt-carrying capacity improved, potentially leading to faster principal reimbursements and higher interest payments.

“This agreement marks a crucial milestone in Zambia’s ongoing efforts to strengthen its economy,” the statement said.

Hichilema was one of about 40 leaders attending a summit in France on Thursday and Friday aimed at easing the debt burden on some of the world’s most vulnerable countries while freeing up billions of dollars in new funds for climate finance.

Zambia is viewed as a test case for a debt-restructuring framework backed by the Group of 20 wealthy nations that was designed to streamline relief for countries caught in a developing world debt crisis sparked in part by the coronavirus pandemic.

But its slow progress in restructuring talks has discouraged all but a handful of other struggling governments from seeking help under the Common Framework mechanism.

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