Zambia's official creditors, which include China, are getting closer to signing a memorandum of understanding on debt relief to the country in May, in what would be a key step needed to pave the way for more IMF funding, sources told Reuters. Zambia has been in default since 2020 when it became one of the first major sovereign casualties of the COVID-19 pandemic era, though progress in overhauling its debt burden has been slow. Zambia's external debt amounted to $18.6 billion by end-2022, according to government data, with China being its biggest bilateral creditor.
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Zambia
Zambia is planning to finish tests that simulate real-world cryptocurrency usage by the end of June to help it create regulations that balance citizens' safety with innovation, science and technology minister Felix Mutati told Reuters. The southern African country also needs digital infrastructure, including digital identities, before cryptocurrencies can be introduced, Mutati said in an interview on Wednesday.
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Zambian President Hakainde Hichilema said China and the U.S. have a responsibility to set aside their differences and help countries such as his get the debt relief they need to avoid further damage to their economies, WSJ Pro Bankruptcy reported. With finance officials from around the world gathering in Washington this week for the International Monetary Fund and World Bank biannual meetings, Mr. Hichilema’s country is emerging as a focal point of discussions on how to restructure poor nations’ debts. U.S.
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Default-stricken Zambia published figures on Wednesday showing that its total public debt stock climbed to $32.8 billion, including interest arrears at the end of last year, of which $18.6 billion was external, Reuters reported. At the end of June 2022 its total debt including interest arrears was $32.5 billion, with $17.5 billion external. Zambia has been looking to restructure its debt after becoming the first African country to default during the COVID-19 pandemic in late 2020.
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Zambia's official sector creditors met on Thursday to discuss the type of debt relief to offer the country, Finance Minister Situmbeko Musoktwane told Reuters. Zambia became the first African sovereign default in the COVID-19 era in late 2020 and has been struggling to restructure debt that reached 133% of GDP at the end of 2021, which analysts have blamed partly on the high number and diversity of creditors.
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Zambian Finance Minister Situmbeko Musokotwane urged other African nations considering using the Group of 20’s Common Framework mechanism to restructure unaffordable debt to act quickly, Bloomberg News reported. Africa’s first pandemic-era sovereign defaulter has been using the template to rework external liabilities totaling $12.8 billion. In recent weeks, Nigeria and Ghana have announced they’re considering revamping their liabilities. Rising interest rates and a surging dollar may push more nations into default as they struggle to pay for imports from fuel to food.
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Zambia's international bondholders have criticised the International Monetary Fund's debt restructuring framework as "arbitrary" and for excluding the country's domestic debt, sources involved in the process have told Reuters. Zambia has been in default for almost two years and an IMF Debt Sustainability Analysis published last week called for its debt-service-to-exports ratio to be cut to a 140% "threshold" from 153% quickly and to 84% by 2027.
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Zambia has requested $8.4 billion in debt relief from its foreign creditors over the next three years, including from China, the country’s single largest creditor and the largest lender to the developing world, WSJ Pro Bankruptcy reported. Zambia’s debt restructuring is widely seen as a test of how much debt relief China will be willing to provide to countries that can’t repay what they have borrowed from Beijing, which has shown a reluctance in recent years to write down its bilateral debts, preferring to lend more or reprofile them rather than accept haircuts.
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Zambia's debt restructuring will be a mixture of haircuts to loans' original value and maturity extensions, a senior Zambian finance ministry official said Thursday, after the Fund approved a $1.3 billion program for the southern African country, Reuters reported. Negotiations with creditors to restructure debt that reached $17 billion at the end of 2021 are starting now, Mukuli Chikuba, the Permanent Secretary to the Ministry of Finance, said at a joint Zambian government and IMF news conference in Zambia's capital Lusaka.
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