(Bloomberg)-Zambia will pay interest rates of as low as 1% until 2037 as part of its debt restructuring deal secured with nations including China this week, according to people with knowledge of the matter.
The southern African country will push out maturities on $6.3 billion in bilateral debt to 2043, representing an average extension of more than 12 years. Rates will increase to a maximum 2.5% after 14 years under the baseline scenario, said the people, who asked not to be identified because the details weren’t public. Zambia was paying an average of 3.9% on its Chinese bilateral loans, according to estimates by Debt Justice, a UK organization that campaigns for loan cancellation for poor nations.
The Zambian government announced the landmark deal in Paris this week under the Group of 20’s Common Framework mechanism for traditional creditors of the Paris Club to negotiate deep relief alongside new lenders, especially China. The nation must now get its private creditors to agree to comparable treatment.