First, Zambia Defaulted on Part of Its Debt, Then Came the Credit Downgrade, Now the Question is What Will China Do?

Zambia’s financial situation is rapidly deteriorating following last week’s announcement by the government that it would default on $3 billion of Eurobond debt. Soon after, the credit ratings agency Fitch downgraded Zambia’s foreign-currency bonds, immediately increasing the cost of borrowing for Lusaka.

Investors weren’t encouraged by Friday’s unveiling of the 2021 annual budget by Finance Minister Bwalya Ng’andu where he forecast yet another increase in the country’s budget deficit but didn’t elaborate debt restructuring plans.

Since China owns around 44% of Zambia’s $11.1 billion of external debt, attention is now turning to see if Beijing will negotiate a loan restructuring settlement similar to what it reportedly did in Angola last week. 

Chinese officials are characteristically quiet as to the current state of debt relief talks with Zambia.

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The post First, Zambia Defaulted on Part of Its Debt, Then Came the Credit Downgrade, Now the Question is What Will China Do? appeared first on The China Africa Project.



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