New forms of debt restructuring reward bad behaviour

China reschedules Zambia’s debts without writing them off

Summit for a new global financing pact in Paris, France. — Image: EPA

Jun 29th 2023

Negotiations over international debt are often headspinning. To reduce the debts of a country that can’t pay the bills, it takes referees from the imf, teams of lawyers and a contest between a country and its creditors. Everyone wants a deal, but no one is keen on taking losses. Just as creditors agree on who should club together, they start arguing about the terms. The chaos can go on endlessly. Countries, unlike bankrupt companies, are never liquidated. “It was a zig-zag, sideways, forwards, backwards, down, up, but we kept our eyes on the ball,” reported Haikande Hichilema, Zambia’s president, after his country finally managed to strike a deal.

This article appeared in the Finance & economics section of the print edition under the headline “Out of the mire”