Zambian finance minister eager to renegotiate debt awaits Chinese team

WASHINGTON/JOHANNESBURG, Oct 15 (Reuters) – Zambia’s finance minister said on Saturday it was still unclear who would lead talks to renegotiate its nearly $6 billion debt with China, the biggest creditor bilateral of the first African sovereign default in 2020 after the COVID -19 pandemic hit.

China co-chairs a committee of official bilateral creditors with France in a debt restructuring Zambia wants under the Group of 20 common framework, a platform for heavily indebted countries to rework their debt with bilateral creditors.

“It’s up to the Chinese authorities to choose who they want to represent them,” Situmbeko Musokotwane said in an interview with Reuters on the sidelines of the annual meetings of the International Monetary Fund and the World Bank in Washington.

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“I don’t know at this particular moment,” he said, when asked who represented China on the official creditors’ committee.

This week, Western countries have intensified their criticism of China, the world’s largest bilateral creditor, as the main obstacle to pursuing debt restructuring agreements for the growing number of countries unable to to service their debt.

At the end of 2021, China held about a third of Zambia’s $17.27 billion international debt, according to Zambian government data. Since then, Zambia has canceled $2 billion in undisbursed loans, many from Chinese lenders.

Musokotwane said negotiations with bilateral creditors, including China, before private creditors had “worked quite well”, but acknowledged there had been complaints from international investors who hold the country’s sovereign bonds.

“It can’t be simple, because people approach it from different angles,” he added.

Zambia secured a three-year, $1.3 billion loan from the IMF in September. It is now targeting debt reduction of $6.3 billion in present value, or 49% of the external debt being restructured. Some bondholders had previously said a 45% cut would be unacceptable.

“There is no point in pretending there is something better when it means you are leaving Zambia with an unsustainable debt situation,” Musokotwane said.

“Because that means we will close today and then a month later or three months later we will default again.”

Zambian grain exports could help meet shortages caused by Russia’s invasion of Ukraine, Musokotwane said, adding that the government hoped to host a forum of foreign agricultural investors in mid-2023.

“We are grooming investors not only in Zambia but from outside to take advantage of the land resources we have, to come and produce food for export,” he said.

The country is ready to open up to 100,000 hectares for this investment plan and will start using a $300 million loan approved by the World Bank to improve roads, electricity and dams in order to attract foreign investors.

“Three or four” companies have expressed interest in acquiring the Mopani copper mine, he said, including South African company Sibanye Stillwater, adding that this interest was “what gives me the assurance that by the end of this year we should probably have a solution”.

A proposal for the government to have “preferred shares” in mining companies would allow it to veto any investor known not to be credible, he said.

The government expects an average copper price of $7,500 a ton in 2023, with growing demand thanks to green technologies likely to support prices, Musokotwane said.

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Reporting by Jorgelina do Rosario and Rachel Savage; Editing by David Gregorio

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