President Hichilema: Zambia Suffering Over US and China’s Debt Restructuring Agreements

The US and China have a responsibility to aid developing countries’ access to debt relief, President Hakainde Hichilema has said.

In November 2020, during the coronavirus pandemic, Zambia defaulted on $18 billion in foreign-currency debt.

However, the country’s creditors are yet to agree on its repayment terms.

Zambia’s external debt is split roughly three ways: one third is owed to Chinese lenders, another to private creditors, and the rest to other governments and multilateral lenders, such the World Bank and International Monetary Fund (IMF).

Its combination of creditors has left Zambia stranded, as prolonged disagreements between the US and China on the matter plunges the country further into debt distress.

China has asked that Zambia’s multilateral creditors, including the World Bank and IMF, write down their loans. But this request is opposed by US and European governments, who have argued that such a move would equate to a bailout for Beijing’s creditors.

President Hichilema said in an interview that “the Third World should not suffer […] because of the issues that are being discussed between America and China.”

He also highlighted that Zambia is not the only developing country facing such a situation, but is “like a guinea pig” in the way restructuring the nation’s debt may influence the approach taken in other countries.

Finance officials have expressed concern that this dispute and its lack of resolution may deter other indebted developing countries from seeking debt relief.

The situation continues its damaging effects on the Zambian economy: the kwacha has lost almost a third of its value over the last six months; annual per capita income dropped $400 from 2018 to 2021; and nearly two-thirds of the population live on less that $2.15 a day.

In March, US Vice President, Kamala Harris, urged the country’s bilateral creditors to support its debt relief. There is hope that, following such calls to action from international officials, Zambia’s debt restructuring may begin to make headway.

Photo: Hakainde Hichilema Facebook