Foreign Policy published on 1 July 2026 an article titled "What to Know About Ethiopia's Debt Breakthrough" by Nosmot Gbadamosi.
A year ago, Ethiopia reached a final agreement on restructuring $8.4 billion of bilateral loans, with $3.5 billion in debt relief. But a deal on the $1 billion bond held by private lenders proved to be more elusive. Under a recent deal, the bondholders have agreed to reduce the $1 billion debt to $880 million, repaid in installments by 2029.
The Guardian published on 6 November 2024 an article titled "US Cancels $1.1 Bn of Somalia's Debt in 'Historic' Financial Agreement" by Faisal Ali.
Somalia announced the United States will cancel more than $1.1 billion in outstanding loans, which date back to the Siad Barre government that collapsed in 1991. This is the largest single component of Somalia's $4.5 billion external debt.
Other Paris Club members also announced this year they are waiving $2 billion of additional debt. These decisions will allow Somalia to more readily access public financing from international financial institutions.
Reuters published on 1 October 2024 an article titled "Ethiopia Expects 'Tangible Progress' on Deal with Creditor Nations by December" by Duncan Miriri.
Ethiopia defaulted on its external debt in December 2023 and hopes to reach a deal with creditors by the end of this year. Ethiopia's debt stands at about $29 billion with half of it owed to multilateral lenders like the IMF, World Bank, and African Development Bank. Of the $12 billion owed to bilateral lenders, China accounts for more than $7 billion, Paris Club countries under $2 billion, and Saudi Arabia just over $1 billion.
Reuters published on 8 September 2023 an article titled "Zambian President to Visit China, Seeks to Formalise June Debt Deal" by Joe Cash.
Zambian President Hakainde Hichilema is currently visiting China where obtaining final agreement on Beijing's restructuring of debt held by the China Export-Import Bank is one of the primary items on the agenda. Other countries that hold much smaller percentages of Zambia's bilateral external debt include the UK, France, South Africa, India, and Israel.
The Atlantic Council published on 12 July 2023 an analysis titled "Progress on Debt Restructuring Provides a Glimmer of Hope for Developing Countries" by Jeremy Mark and Vasuki Shastry.
The analysis looks particularly at the role of China in recent debt restructuring. It includes an especially useful chart that illustrates the total debt by African countries, divided by class of creditor.
The Rhodium Group published on 29 June 2023 an analysis titled "China's External Debt Renegotiations after Zambia" by Matthew Mingey and Logan Wright.
China appears to be changing its approach in providing debt relief to emerging markets following the recent deal on restructuring bilateral loans to Zambia. However, the Zambia deal reveals that China's Export Import Bank may still not be speaking for all of China's lenders. Beijing's banks remain insistent on extending loan terms and adjusting financing costs rather than accepting haircuts on principal. Beijing's tactics may change further as financial stress in emerging markets builds.
Reuters published on 22 June 2023 an article titled "Explainer: What Is China's Position on Restructuring Debt Owed by Poor Nations?" by Joe Cash.
China wants multilateral lenders like the International Monetary Fund and World Bank to absorb some of the loses on loans to nations such as Zambia that are unable to meet their debt terms. Paris Club countries, especially the United States, have resisted this request.
Megatrends Afrika published on 15 June 2023 a commentary titled "Debt Relief in Africa: Conflicting Interests between the West and China Hinder Multilateral Solutions" by Karoline Eickhoff and Rainer Thiele.
The paper discusses the different approaches to African debt relief taken by China, on the one hand, and Western countries and Western-dominated institutions on the other.
Axios published on 10 April 2023 a commentary titled "Why Zambia's Debt Restructuring Is a Critical Test for China" by Kate Marino.
China has been reluctant to accept the G-20s "Common Framework" roadmap for creditors to work out the debt defaults of lower income nations such as Zambia. China says it wants to be "constructive" in these talks but has not yet committed to provide significant debt relief to Zambia.
The China-Africa Research Initiative published in April 2023 a study titled "Integrating China into Multilateral Debt Relief: Progress and Problems in the G20 DSSI" by Deborah Brautigam and Yufan Huang.
The study evaluates China's participation in a major multilateral experiment in sovereign debt management: the G-20s COVID-19 Debt Service Suspension Initiative (DSSI). The authors argue, with some caveats, that the DSSI was a success.
First, it succeeded in providing a pathway for China, the world's largest bilateral creditor, to negotiate debt treatments together with the Paris Club in the Common Framework. Second, China fulfilled its role fairly well as a responsible G-20 stakeholder. Finally, the DSSI pushed the Chinese government to align interests among fragmented banks and bureaucracies with conflicting goals.
The Center for Global Development published on 24 February 2023 a commentary titled "Will China Play Its Part in Addressing African Debt Distress?" by W. Gyude Moore.
This commentary explores why African debt distress is causing tension between China and other creditors.
The US Institute of Peace published on 1 February 2023 a commentary titled "Four Takeaways from Treasury Secretary Yellen's Trip to Africa" by Edward A. Burrier.
Treasury Secretary Janet Yellen's 10-day trip to Senegal, Zambia, and South Africa resulted in the following 4 takeaways:
--Because of its young population, the United States recognizes that "Africa will shape the trajectory of the world economy over the next century."
--Zambia's debt crisis has far-reaching implications and China is a "barrier" to resolving it.
--Energy transitions in countries like South Africa, which use considerable coal, will be challenged by vested political interests.
--Ending Russia's war on Ukraine is the single best way to help Africa's economies.
Reuters published on 14 October 2022 an article titled "Global Finance Leaders Single Out China as Barrier to Faster Debt Relief" by Andrea Shalal and Jorgelina Do Rosario.
The G-7 argues that China is the missing piece in debt relief for the Global South. China has not sent officials to participate in person at this week's IMF and World Bank meetings. China has not agreed to participate in the G-7 roundtable on debt relief with African countries.
AIDDATA, a research lab at William and Mary, published in March 2021 a detailed study titled "How China Lends: A Rare Look into 100 Debt Contracts with Foreign Governments" by Anna Gelpern, Sebastian Horn, Scott Morris, Brad Parks, and Christoph Trebesch.
The study provides a systematic analysis of the legal terms of China's foreign lending. It analyzes 100 contracts between Chinese state-owned entities and government borrowers in 24 developing countries. Government borrowers in Africa account for 47 percent of the 100 Chinese government contracts.
The major findings are:
1. Chinese contracts contain unusual confidentiality clauses that bar borrowers from revealing the terms or even the existence of the debt.
2. Chinese lenders use formal and informal collateral arrangements to maximize their repayment prospects.
3. Chinese lenders seek advantage over other creditors, using collateral arrangements such as lender-controlled revenue accounts and promises to keep debt out of collective restructuring ("no Paris Club" clauses).
4. Cancellation, acceleration, and stabilization clauses in Chinese contracts potentially allow the lenders to influence debtors' domestic and foreign policies.
The authors conclude the contracts use creative design to manage credit risks and overcome enforcement hurdles, presenting China as a muscular and commercially-savvy lender to the developing world.
Revue de la regulation just published an article titled "L'Afrique et sa dette 'chinoise' au temps de la covid-19" by Thierry Pairault.
The article looks at the significance of African debt to China, what it means, and what role Chinese institutions play. It also considers the impact of the debt on the development strategy of African countries.
Project Syndicate posted on 15 January 2021 a commentary titled "China's Debt Grip on Africa" by Paola Subacchi, University of London.
China is Africa's largest holder of official bilateral debt at 62 percent. (This percentage excludes African debt held by international financial institutions and non-Chinese private banks and bondholders.) However, this makes China a major player in efforts to ameliorate Africa's current debt challenge, which is being exacerbated by COVID-19. Chinese banks complicate the issue because they tend to renegotiate sovereign loans bilaterally and in secret.
Chatham House published on 10 December 2020 an analysis titled "China's Southern Africa Debt Deals Reveal a Wider Plan" by Alex Vines.
The COVID-19 crisis has shown why the current international debt architecture must be restructured. China is responding to debt problems in southern Africa country-by-country.
Panda Paw Dragon Claw posted on 1 September 2020 an analysis titled "What We Know about China's Approach to Debt Relief: Insights from Two Decades of China-Africa Debt Restructuring" by Kevin Acker, China Africa Research Initiative.
The author concludes that when African countries experience difficulty repaying debt held by China that Chinese financial institutions do not seize assets as a way to rectify the problem. Chinese debt relief also tends to be ad hoc and applied on a case by case basis, rather than follow a standardized process, in contrast to debt relief offered by the Paris Club.
Development Reimagined published on 1 September 2020 a study titled "COVID-19 in Africa: Is the Crisis Over? Or Has It Just Begun?"
Most of this study discusses the current impact of COVID-19 in Africa, but it leads with a useful pie chart of $8.3 billion in debt payments due in 2020. So far, 20 of the 38 eligible African countries have applied and negotiated successfully with the Paris Club of lenders for debt payment suspension during 2020. But as the pie chart shows, this accounts for only 24 percent of total payments due in 2020. China accounts for 35 percent of payments due in 2020 and has separately renegotiated some of these payments. The remainder of the payments are owed to private banks, international financial institutions, and countries other than China or members of the Paris Club.
Consequently, this initiative by the Paris Club and China will have limited impact on Africa for three reasons: (1) institutions/countries that are NOT suspending payments in 2020 account for 41 percent of the total; (2) many of Africa's 54 countries are not included in this initiative because they exceed arbitrary income thresholds; and (3) the suspensions only apply to payments due in 2020.
