Zambia on track for debt restructuring next quarter finance minister

China wants more clarity on the IMF assumptions on which the loan programme is based, he said, since these are meant to form the basis of the restructuring negotiations between Zambia and all its creditors. In August, Zambia won International Monetary Fund approval for $1.3 billion, three-year loan programme to help it restructure debts which the government said stood at $14.87 billion at the end of June 2022. Reuters, the news and media division of Thomson Reuters, is the world’s largest multimedia news provider, reaching billions of people worldwide every day. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world’s media organizations, industry events and directly to consumers.

Debt Restructuring

But this determination, based on the findings of a DSA, is not always easy to make; and it is generally conducted with the IMF after the country has approached it for a program. If a country is deemed insolvent, the IMF will move forward with a program—but only if the government implements the IMF’s recommended policy changes to restore debt sustainability, including approaching its creditors to restructure its debts. 債務舒緩 are typically international financial institutions including the World Bank, regional development banks, and the IMF.

How EY can help

Withstanding all such approval, a business or individual can continue operating as normal; otherwise, a business or individual is obliged to proceed into bankruptcy filing. Debt restructuring is a process used by companies, individuals, and even countries to avoid the risk of defaulting on their existing debts, such as by negotiating lower interest rates. Debt restructuring provides a less expensive alternative to bankruptcy when a debtor is in financial turmoil, and it can work to the benefit of both borrower and lender. The Common Framework is a partnership between the G20 and the Paris Club that sought to restructure sovereign debt, grounded in traditional Paris Club terms . This framework allows creditor countries to negotiate together with DSSI-eligible debtor countries on debt treatment.

China as an emerging creditor

However, in the years since, the share of HIPC debt stocks owned by private and non-Paris Club lenders, namely China, has grown significantly, complicating restructuring efforts. CCAA filings were created by the Companies’ Creditors Arrangement Act, a piece of legislation first put forward and passed in 1933 and updated later in 1985. A CCAA filing allows a Canadian company to have a window in time in which they can renegotiate and reorganize their debt payment plans with creditors. Once a CCAA application gets finally rejected, the company in question can be forced into receivership or bankruptcy. This could happen for a number of reasons, chief among them being a failure to come to an agreement with creditors as to how to restructure the debt. Individual debtor countries may reach separate debt restructuring agreements with different groups of creditors, including groups of international banks or groups of governments of creditor countries as appropriate.

Accounting Standards Development in China

Debt restructuring, also known as troubled debt restructuring, is often the last resort before filing bankruptcy. It involves contacting your lenders and creditors to see if they can lower your interest rate or extend your repayment period so you have more breathing room in your budget. After negotiations on the terms of debt relief conclude, a country must maximize creditor participation and apply comparable treatment to all creditors to successfully close out a restructuring.

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