• Failure by China to agree on restructuring this huge loan could prove fatal to Zambia’s bid to access IMF loan.
• Accessing the IMF loan is no longer a pet project for Zambia.
• The loan will enable Zambia to renegotiate with other lenders.

A Legal Expert says Zambia’s Access to the $1.4 Billion International Monetary(IMF) Fund loan is largely dependent on China agreeing to restructure the more than $5.6 billion Zambian debt.

Speaking during the Bi-Annual National Economic Symposium in Lusaka, Chisenga Phiri noted failure by China to agree on restructuring this huge loan could prove fatal to Zambia’s bid to access IMF loan which is widely considered to be cheaper and less ensnaring than the Chinese debt.

Mr. Phiri said China’s participation may involve giving up every serious sovereign positions including, but not limited to, contractual non-disclosure policies separation between Government and Chinese Banks in terms of operation, thereby leading to a serious altering of China’s foreign Policy.

He said worst case scenario if the staff level agreement fails is that Zambia would default again, this time on its Eurobonds as well due this year and in 2024 leading to unimaginable social problems such as messing the free education policy, no new schools will be built, funding to the health system may fail, more cuts and removal of subsidies to energy production, agriculture, social cash transfer and entrepreneurial activities.

“There will be a serious downgrading of Zambia to junk status,” he stated.

“It will make Zambia borrow more, but this time from dangerous lenders leading to more secrecy, opacity, expensive litigation and risk of capture assets.”

Mr. Phiri however said the recent announcement by China that it will participate in the G20 debt restructuring discussions has brought hope to Zambia.

“Accessing the IMF loan is no longer a pet project for Zambia: everything hangs on it,” he added.

Mr. Phiri indicated that the loan will enable Zambia to renegotiate with other lenders for the restructuring of its debt and the suspension of its repayments for a period.

He said this will in turn free up resources to be channeled to the social sectors. Heal and Education, and help to narrow the poverty gap.

According to him, “such a move is meant to shore up foreign currency reserves, reduce inflation and the exchange rate and jumpstart the economy.”