Zambian authorities have agreed with China and other nations to restructure the region's $6.3 billion debt with bilateral lenders.
The development was revealed by a French official during a summit in Paris held on Thursday and set a precedent for nations struggling to service their liabilities. French President Emmanuel Macron is currently hosting global leaders in an attempt to talk about new ways to raise climate financing.
Restructuring Zambia's $6.3 Billion Debt
The world leaders who attended the summit include Brazilian President Luiz Inacio Lula da Silva, South African President Cyril Ramaphosa, United States Treasury Secretary Janet Yellen, and Chinese Premier Li Qiang.
The event seeks to build momentum for an attempt at restructuring the global lending architecture to allow multilateral institutions, such as the World Bank, to do more in helping developing nations address climate change and raise private investment much more easily.
During the summit, both China and France committed to expanding trade ties with a focus on addressing climate-related issues. On the other hand, Yellen said there is an urgent need to boost the International Monetary Fund's (IMF) poverty-fighting arsenal, as per Yahoo Finance.
The World Bank revealed that it is looking to boost climate financing for emerging markets as Kenyan President William Ruto said he would buy back half of his country's $2 billion bond this year.
Thomas Buberl, the CEO of Axa, said that litigation threats undermine insurers' energy-transition efforts. The industry cooperated in the Net Zero Insurance Alliance in an attempt to define protocols and methods that would refocus insurance capacity for the energy transition.
However, Buebrl argued that they were being brutally attacked on legal grounds, preventing them from moving forward together. The CEO also said Axa wanted to expand its blue bond program to other regions.
The historic agreement covers loans from countries such as France, the United Kingdom, South Africa, Israel, India, and China. The latter is Zambia's biggest creditor, with $4.1 billion worth of debt in total, according to the Washington Post.
Agreement To Help Developing Nations
The deal was announced by officials who spoke under the condition of anonymity following the customary practices of the French government. It could provide a roadmap for how China would handle other restructuring deals with other nations that are suffering from debt distress.
The IMF approved the deal allowing the region to receive more funds from the institution. An IMF representative did not immediately respond to a request for comment regarding the development.
Zambia is the biggest copper producer in the continent and became Africa's first coronavirus-era sovereign nation to default. This happened when it failed to pay $42.5 million as a bond payment in November 2020.
China is seen as being central to talks on making progress on providing debt relief to various regions, including Zambia, Chad, Ethiopia, and Ghana. This will be done through the Group of 20's "Common Framework."
The G-20 set up the Common Framework in late 2020 during the health crisis brought by the coronavirus. Reuters said it was meant to expedite and simplify the process of helping countries in debt to get back onto their feet.
