US Treasury Secretary Janet Yellen concluded her visit to Zambia and other African countries, sparking speculation about the purpose of her trip. According to the President of Socialist Party Zambia, Dr Fred M’membe, Yellen’s visit was to address Zambia’s debt with China and to undermine China’s position in Zambia and Africa. The reason for this, according to Dr M’membe, is critical minerals.
The timing of Yellen’s visit also coincided with that of International Monetary Fund (IMF) Managing Director Kristalina Georgieva’s visit to Zambia. Dr M’membe stated that Georgieva’s mission to Zambia was transparent in all her meetings, including one with President Hakainde Hichilema. Dr M’membe also said that the media was present, and that it was nothing but a PR stunt by the IMF to claim that the institution had become better and more humane.
Posting on his Facebook page, Dr M’membe said, “What was the purpose of US Treasury Secretary Janet Yellen’s trip to Zambia and other African countries? To address Zambia’s debt with China, to undermine China’s position in Zambia and Africa, and for what? Critical minerals! And it coincided with International Monetary Fund (IMF) managing director Kristalina Georgieva’s visit to Zambia. What was Georgieva’s mission to Zambia? The answer was transparent in all her meetings in Zambia, including one with President Hakainde Hichilema – the media was present. From what we observed this was nothing but a PR stunt by the IMF to claim that the institution had become better and more humane.”
Zambia has requested a 38-month arrangement from the IMF under the Extended Credit Facility Arrangement (ECF) in the amount of SDR 978.2 million (Special Drawing Rights) – 100 percent of Zambia’s quota. The proposed ECF-supported program aims to restore macroeconomic stability and foster higher, more resilient, and more inclusive growth. To support this, the IMF is seeking extensions of maturity dates and reduction of interest payments.
However, there are serious challenges in this situation, according to Dr M’membe. Unlike the debt relief efforts of the 1990s and early 2000s, where lenders were mainly bilateral and multilateral, and all belonged to the Paris Club, today, lenders include private bond market holders. These lenders have different characteristics and motives, and today there’s also China, which was not one of the lenders of the 1990s and 2000s. The Chinese debt is a mixed basket of private, quasi-government and government creditors. This makes it very difficult to reach a common framework. Even when the characteristics of the lenders were similar under the Paris Club, it took more than ten years to agree on the debt relief received in the early 2000s.
Dr M’membe said, “It may take a long time to reach a deal or some consensus and it will not be fair and just to blame China for this. It is important to remember that the Chinese debt is a mixed basket of private, quasi-government and government creditors. This makes it very difficult to reach a common framework. Even when the characteristics of the lenders were similar under the Paris Club, it took more than ten years to agree on the debt relief we received in the early 2000s. And how long has it taken the IMF and the Zambian government to reach a deal? They started negotiating in 2017. This complex mixture of lenders may take a long time to reach a deal or some consensus.”
