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China gives Zambia debt relief

ZAMBIA has been granted a Debt Service Suspension Initiative (DSSI) by the Chinese Government for all Government to Government (G2G) and all Concessional facilities as per the G20 guidelines of one-year grace period and three years repayment.

The maximum amount of 2020 debt service suspended and rescheduled would be US$225.3 million (debt service on Chinese entities from May to December).
Government external debt service on Chinese loans amounts to approximately US$426.3 million in 2020 and US$428 million in 2021.
Main Chinese creditors include the Export Import Bank of China, China Development Bank, the Industrial and Commercial Bank of China and a few other commercial entities including the Bank of China.
This is contained in a document prepared by the Ministry of Finance with the assistance of financial advisor Lazard frères.
This is in response from investors relating to the presentation Government made to creditors on September 29, this year.
The document has been posted on the London Stock Exchange.
According to the document, Government had submitted a bilateral request to the Chinese Government for debt service deferment on Government to Government (G2G) facilities.
“The Chinese Government has since agreed to grant DSSI for all G2G facilities and all Concessional facilities as per the G20 guidelines of one-year grace period and three years repayment.
“As for the commercial facilities, Government has been engaging the Banks and SINOSURE bilaterally on the insured loan facilities. These discussions are still underway pending agreement on deferment of interest payments and accumulated arrears,” the document said.
The document indicated that assuming the debt service suspension requests made by Government were all successful.
In addition, the document said, there were ongoing discussions to include arrears that had accrued up to end-April 2020 (approximately US$201 million) to be included in the DSSI.
“The Government of the Republic of Zambia has proactively engaged with Chinese creditors in the past few months, in the context of the DSSI, to try and secure the suspension of debt service falling due from May 1st, 2020 to December 31st, including arrears accumulated up to May 1st, 2020.
“Beyond discussions on debt service suspension, the Government have informed Chinese creditors that they would be asked to participate to whatever subsequent debt treatment might be necessary to restore long-term public debt sustainability,” the document said.
It said Government intended to share the burden equitably across its official and commercial creditors, save for multilateral creditors that would be called on to participate by way of fresh financing rather than debt relief as was customary in such circumstances.


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