The French government announced Thursday that Zambia had reached a deal with its largest creditor, China, and other creditor nations, to restructure $6.3 billion in loans, The Associated Press (AP) reported.
The deal provided the landlocked African country with concessions to make it easier to pay back its debt to China, which Zambia owes $4.1 billion, and to France, the United Kingdom, South Africa, Israel and India, according to the AP news report. The deal was hatched on the sidelines of a global finance summit in Paris and approved by the International Monetary Fund (IMF), per AP.
The bilateral lenders, led by China and France, agreed to extend the maturities on their loans to Zambia over some 20 years, with a three-year grace period, according to Bloomberg. (RELATED: Study Reveals How China Became The World’s Biggest Loan Shark)
Press Conference Secretary of the Treasury Janet L. Yellen in Paris, France June 22,2023 https://t.co/AdJ40JmWp8
— Treasury Department (@USTreasury) June 22, 2023
The two-day Summit for a New Global Financial Pact seeks novel financial solutions to the global challenges of poverty and climate change. “Policymakers and countries shouldn’t ever have to choose between reducing poverty and protecting the planet,” Macron said in his opening remarks at the summit, Le Monde reported.
The deal is the first major financial relief for a developing economy under the G20’s Common Framework that brings the traditional creditor nations of the Paris Club to the negotiating table with new creditor nations China and India, Bloomberg reported. China’s had previously distanced itself from multilateral efforts to ease the debt burden on developing countries, Le Monde noted.
“I welcome the consensus that official creditors have reached on providing a debt treatment to Zambia,” said U.S. Treasury Secretary Janet Yellen, according to Thursday press release from the Treasury Department.
Zambia is one of the approximately 60 percent of low-income countries that are at high risk or already in debt distress after the COVID-19 pandemic, up from 30 percent in 2015, IMF experts Kristalina Georgieva and Ceyla Pazarbasioglu noted in an IMF blog post.