Zambia’s debts to the Industrial & Commercial Bank of China and Bank of China will be treated as commercial in debt talks, a senior finance ministry official said Thursday, after a deal was struck with bilateral creditors including China last week.
Zambia, which has been in default for nearly three years, reached an agreement last week to restructure $6.3 billion of bilateral debts and its international bondholders expect to strike a restructuring deal in the coming weeks.
Debt of $4.1 billion owed to the Export-Import Bank of China, which co-chaired the bilateral creditor committee, is being categorised as bilateral, Secretary to the Treasury Felix Nkulukusa said at an event discussing Zambia’s debt restructuring.
China had been accused by western officials of delaying Zambia’s debt restructuring, something it repeatedly denied.
“The money we owe Industrial & Commercial Bank of China and other money we owe to Bank of China will be treated as commercial,” Nkulukusa said.
“So there will be some different treatment and this is why some people are asking why it has reduced to $6.3 billion from $8 billion,” he said, referring to the bilateral debt to be restructured.
Zambia’s attorney general is also reviewing a non-disclosure agreement that will be signed with international bondholders, Nkulukusa said, adding that he thought bondholders would opt for principal haircuts over the maturity extensions preferred by bilateral lenders.
“So far we have seen a lot of positive feedback from them,”
Nkulukusa said, referring to the bondholders.
Bilateral creditors have agreed to extend the maturity of debt owed by Zambia by more than 12 years, while “very concessional” interest rates will not exceed 2.5% until 14 years have passed, finance minister Situmbeko Musokotwane told Zambia’s parliament on Tuesday.
