Chinese creditors working to resolve Africa’s debt woes - diplomat

Beijing’s top Africa diplomat has said that the Chinese financial institutions, not only the country’s official creditors, are working to help ease the debt woes of African nations, which have worsened due to the pandemic-induced global economic downturn.

China, Africa’s largest creditor, has agreed to take part in a World Bank and International Monetary Fund-supported initiative to suspend debt service on official bilateral debt for poorer countries.

However, Beijing has come under criticism, notably from the United States, for lacking transparency about its lending and due to uncertainty surrounding which of its lenders would participate in the relief programme.

Financial institutions from China - which is not a member of the Paris Club of official creditors - have extended billions to a number of African countries from Zambia to Angola and Kenya.

Wu Peng, director-general of the Department of African Affairs at China’s foreign ministry, said he welcomed a deal announced this week that will allow Zambia to defer debt repayments due this month on a loan from the China Development Bank (CDB).

“This fully shows that in addition to official creditors, other Chinese financial institutions are also actively resolving the debt issue of Zambia and other African countries,” Wu wrote on Twitter.

The pandemic exacerbated a debt crisis in Zambia that is now pushing the copper producer towards a sovereign default.

The government missed a $42.5 million coupon payment on one of its Eurobonds that was due on Oct. 14 but has a 30-day grace period before it goes into default. It has asked Eurobond holders to defer interest payments until April 2021.

But bondholders have so far rejected the request, saying it was unclear whether key lenders such as China would also agree to reschedule repayments. Reuters.

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