Zambia reaching end of debt restructuring process

France, which along with China heads the committee of public sector creditors for Zambia, was earlier this month the first country to sign a bilateral debt restructuring agreement with Zambia under the so-called G20 common framework.

Zambia, Africa's biggest copper producer which has a population of nearly 20 million people, was the first nation to succumb to its debts during the Covid pandemic, defaulting on its $18.6 billion external debt in 2020.

The common framework was adopted that year by the G20 group of nations to ensure orderly debt restructuring for low-income countries.

Lusaka last year reached an agreement in principle with official creditors on $6.3 billion of its debt.

France only holds around $100 million of the $6.3 billion in official sector debt to be restructured but the diplomatic source said the December 8 bilateral agreement "paved the way for all of the countries and all of the creditors".

Earlier this year Zambia also reached a deal to restructure more than $3.5 billion in private sector debt under the G20 common framework.

The G20 debt restructuring process brought together the Paris Club of official Western creditors and G20 nations which are not part of the group, in particular China.

The process has not always been smooth, however, but a source close to the Paris Club said discussions with China's Export-Import Bank were much more constructive this year.

"It proves that multilateralism works, that it's credible, that it's efficient and that it's fair," said the diplomatic source.

The experience with Zambia's debt restructuring has allowed different parties to gain experience with the process which has led to quicker treatment for Ghana and Ethiopia, which are in similar debt restructuring procedures.

Zambia is seen as a test case for the G20 common framework at a time where there are rising concerns over debt in low-income nations.