Zambia finds Sh220bn more debt on books, with China major creditor

Zambia's newly elected government on Thursday said it owed $2 billion (Sh220 billion) more to foreign creditors than previously thought, with more than $6 billion (Sh660 billion) owed to China alone.

The resource-rich but impoverished African nation said external debt stood at $14.48 billion (Sh1.59 trillion) at the middle of the year -- more than 60 percent of gross domestic product.

Debt had ballooned under the government of Edgar Lungu, who was toppled in August elections by veteran opposition leader Hakainde Hichilema.

Hichilema is in talks for a bailout from the International Monetary Fund after Zambia became the first African nation to default on its debt during the coronavirus epidemic.

Of the total debt, Zambia owes China $5.75 billion -- or $6.18 billion including unpaid interest, Finance Minister Situmbeko Musokotwane told parliament.

"The stock of public and publicly guaranteed external debt at the end of the second quarter stood at $14.48 billion excluding interest arrears," he said.

Lungu was accused of borrowing heavily to splash out on infrastructure projects during his six- year tenure.

Despite vast reserves of copper and other minerals, Zambia's economy contracted in 2020 -- the first recession sincew 1998 -- and inflation remains in double digits.

Hichilema campaigned on a pledge to improve governance and restore an economy that over years of rapid growth transformed the nation into a middle-income country.

The government held talks with the IMF from September 27 to 1 October seeking a bailout to restructure its debt.

"Government is actively engaging the IMF for a fund programme aimed at providing an anchor to our debt restructuring," the minister said.