By Enyichukwu Enemanna
US Treasury Secretary, Janet Yellen has said debt overhang is a drag on the whole economy of Zambia, saying it is critically important to resolve the debt crisis to make progress.
Speaking Monday during a visit to the east african country, Hellen accused China, Zambia’s key creditor, of frustrating efforts towards the debt problem resolution.
She expressed optimism that progress could be made in coming days, following her meeting with Chinese officials in Zurich last week.
She said, “I specifically raised the issue with Zambia (with Chinese officials) and asked for their cooperation in trying to reach a speedy resolution and our talks were constructive.
She told the Zambian Finance Minister Situmbeko Musokotwane, that the timely finalisation of Zambia’s debt treatment was a top priority for the treasury.
“We will continue to press for all official bilateral and private-sector creditors to meaningfully participate in debt relief for Zambia, especially China,” added Hellen.
Yellen said she was keen to continue talks with Musokotwane and other Zambian officials about the country’s “impressive progress” on economic reforms, and how regional economic integration and deepening trade ties could support the country’s growth.
Earlier in his bilateral meeting, Zambian Finance Minister underlined that the debt restructuring process has been moving slowly, wih its outcome not certain.
While urging global leaders to restructure the debt process forward, he said it was needed to create conditions conducive to investments and to reduce pressure on Zambians to migrate.
During a meeting with President Hakainde Hichilema who took charge in August 2021, Yellen told the Zambian leader a debt treatment deal under the Common Framework was “overdue”.
A senior Treasury official, speaking on condition of anonymity, said US officials believed progress was possible soon given intensified discussions with China.
According to the official, Beijing’s insistence that local debt owned by foreign investors be included, and that multilateral development banks also take a haircut have been rejected by the United States, Zambia and other countries.
Meanwhile, Yellen told reporters it was important for Zambia to address corruption and human rights, and to create a business environment that would promote investment and trade.
She lauded Hichilema for making the fight against corruption an important part of his agenda.
“It’s something that needs continued focus. I would say the work isn’t done, but there clearly has been an important focus on it,” she said.