African diplomats lobby for debt restructuring Bill

Diplomats from eight southern and east African countries have signed a letter calling on the UK Government to support a private member’s Bill that aims to speed up debt restructurings, after economic crises meant countries were unable to pay back loans. Since 2020, countries including Zambia, Ghana and Sri Lanka have defaulted on their overseas debts, reports The Guardian. Most poor countries have cheap loans from the International Monetary Fund and World Bank, which give new ‘concessional’ loans instead of writing down old ones. The UK Bill, introduced in November 2024 by the Labour MP Bambos Charalambous, would ‘prevent private creditors suing countries while debt relief negotiations are taking place, and from seeking higher repayments than other creditors’, said a letter sent to the British chancellor, Rachel Reeves, in March. The letter said ‘90% of debt owed to private creditors by the world’s poorest countries is governed by English law and is transacted through the City of London. This is why any relief from undue profit to private lenders relies on your government.’ Signatories included High Commissioners to the UK from Zambia, Mozambique and South Africa, which has made tackling the ‘unprecedented debt crisis among many African countries’ a priority of its G20 presidency this year. Charalambous said he hoped the government would adopt the Bill and that he had met the Treasury Minister Emma Reynolds.

A UK Government spokesperson said: ‘The UK fully agrees that private creditors should participate in restructurings on comparable terms. Overall, we have seen evidence of private creditors’ willingness to engage and provide debt treatments where needed, including for Zambia and Ghana. As such, the UK is not currently pursuing a legislative approach to ensuring private creditor participation in restructurings, although we continue to keep our position under review.’ Zambia stopped repaying its international debts in November 2020, according to The Guardian. Along with Ethiopia and Chad it sought to restructure its loans in early 2021 under a new G20 process called the common framework. However, the process was fraught with delays. It took 17 months for Chad to reach a deal that did not cut debt levels, after the commodities trader Glencore dragged out negotiations. Chinese intransigence reportedly held up Zambia’s agreement with lending countries until 2023. Those countries then rejected a deal the Zambia Government reached with western bondholders, as they said it was better than their deal. A bonds agreement was finally reached in 2024. In Zambia, Malawi and Ghana, the African Export-Import Bank  and Trade & Development Bank have not agreed to loan writedowns. Both are regional trade banks set up by African governments that lend at high interest rates but have demanded to be excluded from restructurings like the IMF and World Bank.

Full report in The Guardian