Zam­bia to Seek Re­struc­tur­ing of Debt to China Af­ter IMF Warn­ing

Zambian Business Times - - PUBLIC FINANCE - Source: Bloomberg

Zam­bia’s cab­i­net ap­proved plans to re­struc­ture the coun­try’s loans from China af­ter the In­ter­na­tional Mone­tary Fund said Africa’s sec­ond-big­gest cop­per pro­ducer was at high risk of debt distress.

The gov­ern­ment will also source fi­nanc­ing di­rectly from Chi­nese lenders rather than through con­trac­tors in a bid to cut the cost of bor­row­ing, the pres­i­dency said Tues­day in an emailed state­ment.

Zam­bia’s ex­ter­nal debt grew to $7.6 bil­lion, or 29 per­cent of gross do­mes­tic prod­uct, by the end of Au­gust, ac­cord­ing to Fi­nance Min­istry data, a sit­u­a­tion that prompted a warn­ing in Oc­to­ber from the IMF.

While $3 bil­lion has been raised in Eurobonds since 2012, the bulk of the new for­eign debt is from Chi­nese state-owned com­pa­nies and has gone to build­ing roads, air­ports and power plants. The gov­ern­ment has ear­marked more than 10 per­cent of its 2018 spend­ing to go to­ward ser­vic­ing for­eign loans.

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