Within months of his election last year, Zambia’s president Hakainde Hichilema had succeeded in negotiating a $1.4bn IMF bailout for the debt-stricken southern African country. But hammering out a deal with all its creditors, chief among them China, could take much longer.
With Beijing now the biggest bilateral lender to low-income countries, Zambia’s travails are a test case of its willingness to take the lead in restructuring the debt obligations of defaulting states. Until now, Beijing has negotiated with its borrowers behind closed doors, one to one.
At a time of rising economic stress when Sri Lanka is in default and Pakistan is close to it, other countries that are heavily indebted to Beijing are keeping a close eye on proceedings in Lusaka, as are its other creditors. The Zambian crisis also illustrates how Chinese loans come from a variety of government institutions whose interests often vary, adding extra complexity to efforts to reach a deal.