Reuters Next: Zambia on track for debt restructuring next quarter -finance minister (updated)

Jiangxi Bank

30/11/2022 09:36

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      Pandemic, economic mismanagement led to sovereign debt
default
    

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      Zambia's external debt worth around $15 billion 
    

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      China seeking clarity on IMF debt relief parameters
    

  
 (Recasts, adds details, context, quotes)
    By Rachel Savage and Bhargav Acharya
       JOHANNESBURG, Nov 30 (Reuters) - Zambia is pushing hard
to complete the restructuring of nearly $15 billion of external
debt in the first quarter of 2023 and is "in active engagement"
with its largest bilateral creditor China, Zambia's finance
minister said in an interview at the Reuters NEXT conference.
    Zambia defaulted on its sovereign debt in 2020 and the
current government, which took power last year, has been on a
quest to restructure its loans and rebuild an economy ravaged by
mismanagement under previous administrations and COVID-19.
    In August, Zambia won International Monetary Fund (IMF)
approval for $1.3 billion, three-year loan programme to help it
restructure debts which the government said stood at $14.87
billion at the end of June 2022.
    Zambia's Finance Minister Situmbeko Musokotwane told Reuters
that China had sought clarification from the Zambian government
and the IMF on their debt agreement, he said.
    "The Chinese... are asking (for) a number of clarifications,
which us and the IMF are providing them," Musokotwane said.
    China wants more clarity on the IMF assumptions on which the
loan programme is based, he said, since these are meant to form
the basis of the restructuring negotiations between Zambia and
all its creditors.
     Zambia's much-delayed debt restructuring is seen by
analysts as a test case for what are expected to be a spate of
defaults in poorer countries that have borrowed heavily not only
in the capital markets but also from countries including China.
    At the end of 2021, Chinese creditors accounted for almost
$6 billion of Zambia's external debt, which was then $17.27
billion.
    The Export-Import Bank of China is representing all Chinese
creditors in their restructuring negotiations with Zambia,
Musokotwane said. These include commercial banks, the Industrial
& Commercial Bank of China  601398.SS , Jiangxi Bank  1916.HK 
and China Minsheng Bank  600016.SS .
    China's Ministry of Foreign Affairs did not immediately
respond to a request for comment.
    Musokotwane added that private creditors were cooperating
well in debt relief discussions and that there had been a
bondholder meeting this week.
    Zambia's government said in October it needs a present value
debt reduction by 2027 of $6.3 billion, or 49% of the debt being
restructured, to meet IMF targets, a level some international
bondholders have previously said would be unacceptable.
    COPPER MINING
    Musokotwane also said he hoped to make an announcement by
the first quarter of next year about potential new investors in
Konkola Copper Mines (KCM) and Mopani Copper Mines (MCM).
    "We are hoping that by first quarter of next year we should
be there with some of them. And also some of the new investments
that are coming from the U.S. and other places," he said.
    Zambia's previous government put KCM into liquidation in
2019, triggering a legal dispute with its parent company,
Vedanta Resources, that is now being settled out of court.
    Zambia's state-owned mining company ZCCM Investments
Holdings  ZCCM.LZ   took over MCM in 2021 from commodities giant
Glencore  GLEN.L , which mothballed its operations in 2020 due
to weak copper prices.
    The government is aiming to treble copper production to 3
million tonnes per year within the next decade in Africa's
second largest producer of the mineral. 
     To view the Reuters NEXT conference live on Nov. 30 and
Dec. 1, please click here.
 (Reporting by Rachel Savage and Bhargav Acharya, Additional
reporting by Nelson Banya in Harare
Editing by Alexander Winning and Raissa Kasolowsky)
 ((Rachel.Savage@thomsonreuters.com))