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Zambia: IMF staff agreement puts heat on Chinese to improve transparency

By David Whitehouse
Posted on Wednesday, 5 January 2022 09:57

Zambian President Hakainde Hichilema in Washington DC, US on 27 September 2021. Twitter/@HHichilema

Agreement between Zambia and the IMF on an extended credit facility will put pressure on China to be more open about the terms of its loans, economists say.

Zambia reached a staff-level agreement with the IMF in early December. Approval of that agreement by the IMF’s executive board depends on a debt restructuring deal with creditors. Finance Minister Situmbeko Musokotwane said on December 21 that the government expects to conclude talks with creditors on debt restructuring by June.

Musokotwane’s timeline is “realistic”, but the balance of risks is tilted towards a longer time period, says Irmgard Erasmus, senior financial economist at Oxford Economics in Cape Town. The “asymmetric credit information framework” among creditors due to China’s confidentiality clauses in infrastructure-related loans is likely to be a challenge, she says.