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Terms and Conditions of Zambia and China’s Deal

The lack of transparency in a deal reached between Zambia’s debt-laden government and the China Development Bank (CDB) is making Zambia’s debt crisis worse, says the head of a China-Africa think-tank. Zambia reached a deal with the CDB, the biggest of three state-owned policy banks, to defer debt repayments on a loan that were due this month, Zambia’s government announced on Thursday. Under the deal interest payments were postponed for six months until the 25th April 2021, the secretary to the Treasury Fredson Yamba said in the statement. The deal shows rare flexibility on behalf of a Chinese lender, but the secretive nature of negotiations – with the size of the loan and the amount of the debt repayments due remaining undisclosed – is adding to Zambia’s problems by blocking the country’s access to international capital says Eric Olander, co-founder and managing editor of the China Africa Project. Zambia owed CBD around $311m in June 2019, according to the latest Zambian finance ministry figures. The Zambian government missed a $42.5m coupon payment on one of its Eurobonds that was due on October 14 but has a 30-day grace period before it goes into default. The deal is also unlikely to pressure Zambia’s bondholders to take a haircut and accept similar terms on their returns, Olander says.