© Reuters. FILE PHOTO: Voters queue at a voting station in John Howard township in Lusaka, January 20, 2015. Zambians flocked to the polls on Tuesday to choose the next leader of one of Africa’s most promising frontier markets, in what shaped up as a tight race bet
(Reuters) – China is negotiating a compromise plan with other major creditors that could help break a logjam in debt-relief talks for struggling developing nations, the Wall Street Journal reported on Tuesday.
Citing people familiar with the talks, the Journal said the new plan, if agreed, could see China drop its demand for multilateral lenders such as the World Bank and International Monetary Fund to join it in taking losses in any debt-restructuring deals that has stood as an obstacle to reaching workouts for countries like Zambia and Ghana.
That concession would be in return for multilateral lenders and regional partners such as the Asian Development Bank and African Development Bank making more explicit commitments to provide fresh low-cost financing, including grants, to countries whose debt is being restructured, the Journal said.
Specifically, the new plan could help break an impasse that has held up an agreement by China and other government creditors to restructure the debts of Zambia and serve as a model for multibillion-dollar debt-relief deals for other developing countries in financial distress, the people told the Journal.
Negotiations could then move on to the details of Zambia’s debt restructuring, such as extending repayment deadlines and lowering interest rates. China continues to oppose taking losses on the face value of its loans, people close to Beijing’s decision-making told the paper.
Top officials from China will attend the World Bank and International Monetary Fund spring meetings in Washington this week, their first attendance in person in three years after COVID-19 curbs limited them to virtual participation.
The Chinese officials are expected to take part in Wednesday’s Global Sovereign Debt Roundtable meeting to discuss the matter.
On Monday, the U.S. Treasury said Secretary Janet Yellen would press for urgent resolution of requests by Zambia and Ghana for restructuring of their sovereign debts, and moves to conclude a debt treatment for Sri Lanka.
