Zambia has requested $8.4 billion in debt relief from its foreign creditors over the next three years, including from China, the country’s single largest creditor and the largest lender to the developing world, WSJ Pro Bankruptcy reported. Zambia’s debt restructuring is widely seen as a test of how much debt relief China will be willing to provide to countries that can’t repay what they have borrowed from Beijing, which has shown a reluctance in recent years to write down its bilateral debts, preferring to lend more or reprofile them rather than accept haircuts. The International Monetary Fund released a debt sustainability analysis for Zambia on Tuesday showing the country has requested $8.4 billion in debt relief through 2025 to help plug an $11 billion financing gap over the next three years. Zambia carries roughly $17 billion in foreign debt plus interest arrears, mostly split between sovereign creditors like China, multilateral lenders and commercial bondholders. Debt relief between now and 2025 would help stabilize Zambia’s foreign reserves and keep debt servicing at sustainable levels, the IMF said. Sovereign creditors agreed in principle to provide debt relief in July, unlocking the first part of an IMF bailout of around $1.3 billion, approved in late August. The World Bank is also providing around $1.2 billion to help plug the financing gap.
