Zambia has suffered a major setback in long-running efforts to restructure $3 billion of debt after failing to reach agreement with official creditors like China under the G20 Common Framework.
Zambia announced a revised bondholder deal approved by the IMF still failed to achieve comparable relief terms from bilateral lenders. Creditors objected the deal would breach the principle of equal treatment.
This leaves Zambia, which defaulted in 2019, stuck without resolution three years on and Western nations accusing China of obstruction. Both sides have dug in their stances.
Bondholders blasted the lack of progress, arguing their latest offer was more generous on net present value and haircut terms than official creditor packages with no reductions. Creditors are demanding relief exceeding what the IMF deems sustainable, they contend.
An IMF assessment found Zambia’s initial bondholder deal would still breach debt-to-GDP and debt-to-exports targets in 2024 and 2027.
With the Common Framework yet to produce relief for any nation, Zambia’s failed bid highlights deep flaws in the G20 process as micromanaging creditors refuse pragmatism. The impasse leaves Zambia’s economic recovery hamstrung.
