Zambia’s Secretary to the Treasury, Felix Nkulukusa, stated on Friday (June 6) that the $45 million loan granted to the country by the African Export-Import Bank (Afreximbank) is a commercial loan and will be restructured.
“We are still negotiating with them [Afreximbank]. The debt will be restructured,” Nkulukusa told Reuters in the capital Lusaka, adding, “this is not a concessional loan, but a commercial one.”
The bank argued that, as a multilateral institution similar to the International Monetary Fund (IMF) or the World Bank — which provide concessional loans below market rates — it is exempt from absorbing losses when countries default. Afreximbank maintains an even stricter stance, refusing any debt renegotiation. It claims that its status as a preferred creditor exempts it from participating in write-downs or losses. This position has drawn criticism from debtor countries facing economic hardships worsened by debt burdens. African banks’ insistence on retaining privileges similar to those of the IMF has created tension in the restructuring process.
However, some of the development bank’s loans are issued at commercial rates, which are generally subject to restructuring.
Sources told Reuters in April that the Paris Club of official creditors made it clear that Zambia must restructure its debts with Afreximbank.
The southern African country owes $45 million to Afreximbank, according to the Overseas Development Institute (ODI) — an independent think tank focused on international development and humanitarian issues. This debt is part of a financing package provided by the bank to support fertilizer imports and vaccine purchases through the African Vaccine Acquisition Trust (AVAT) program.
Fitch downgraded Afreximbank’s credit rating last week to just above speculative grade, with a negative outlook, citing high credit risk and weak risk management policies.
Source: Diário Económico
