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Japan overtakes China in bid to provide Kenya with fresh loans

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Japan has leapfrogged China in a bid to provide Kenya with fresh loans for developmental projects for the second year running.

While China has cut fresh financial commitment to the East African nation, Japan, on the other hand, has now moved to the top of the list of bilateral lenders to the country.

In November last year, President Xi Jinping of China had disclosed during the Eighth Ministerial Conference of the Forum on China-Africa Cooperation (FOCAC) that China would reduce investments in Africa by a third in three years.

Xi’s China had committed $40 billion to Africa, a 33.3 percent drop from the $60 billion in the last two FOCAC summits, which take place every three years.

A report by the Kenyan Treasury on Thursday, noted that the country’s budget estimates for the financial year starting July, listed Japan as the largest source of bilateral loans and grants, leapfrogging China which has been the biggest financier for nearly a decade.

“Beijing is projected to lend Kenya Ksh29.46 billion ($254.9 million) for the fiscal year 2022/23, a sharp cutback from Ksh140.03 billion ($1.2 billion) in the 2015/16 budget.

“That marks the second year in a row that China will trail Japan in bilateral loans, having committed Ksh21.25 billion ($183.9 million) in the current year ending June against Tokyo’s Ksh36.49 billion ($315.7 million).

“However, China remains the biggest bilateral creditor by far due to big-ticket deals it has inked with Kenya in the last decade to fund and build mega infrastructure projects such as roads and a modern railway.

“Kenya owed China $6.95 billion last December compared with $1.42 billion to Japan,” according to the latest data by the Treasury.

VenturesNow

Ghana seeks to hasten debt restructuring talks

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Barely days after Zambia announced a significant development in resolving its protracted debt restructuring,  Mohammed Amin Adam, Ghana’s Finance Minister, declared on Tuesday that the administration intended to move the debt restructuring talks along quickly.

The West African nation is now in negotiations to restructure bonds worth roughly $13 billion with foreign investors. In December 2022, Ghana defaulted on the majority of its $30 billion in external debt due to escalating debt payments and inflation.

Tradeweb data indicates that the international bonds issued by Ghana experienced the largest increase, with a jump of up to 1.1% on the dollar, to 42.67 cents for the May 2029 maturity.

Ghana, one of the first nations in Africa to default on its foreign debt and a major producer of oil, gold, and cocoa, is experiencing the worst economic collapse in a generation, characterized by double-digit inflation and skyrocketing public debt.

Most indebted African countries have applied for a debt restructuring plan under the G20 framework; although the agreement has not yet been finalized. Ghana, Ethiopia, Chad, and Zambia are some of the countries that formally defaulted on their national debt.

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VenturesNow

Zambia seals $3 billion international bond rework

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In a significant development that moves the nation closer to exiting its protracted debt restructuring, Zambia has announced that it has achieved an agreement with a consortium of private creditors on the restructuring of $3 billion of its foreign bonds.

According to the most recent agreement, Zambia’s three current instruments would be converted into two amortizing bonds, one of which would have higher repayment rates if the nation’s economic prospects and capacity to manage its debt were better.

“History has been made!” President Hakainde Hichilema said on social media platform X. “We are pleased to announce the agreement with our Eurobond holders.”

With some substantive changes, the nature of Monday’s proposal is similar to a preliminary agreement that was struck late last year but was later abandoned because official creditors, who include nations like China and France, rejected it.

Bondholders’ total claim against the country increased to $3.98 billion as a result of accrued unpaid interest; however, under the terms of the revised agreement, investors will get bonds with a face value of $3.05 billion, down from the $3.135 billion that was initially suggested in October.

Being the first African country to default on its foreign debt following the effect of the Covid-19 pandemic and has been keen on a restructuring of the debt. However, the lengthy delays in the process have hindered much-needed investments, slowed down economic growth, and put pressure on the regional financial markets.

After a proposal to restructure $3 billion in Eurobonds was rejected by its official creditors, Zambia struggled to restart its debt restructuring process. According to international media, China and other creditors did not think the proposed debt relief granted by the government matched that of the bondholders.

A terrible drought that has been labelled a national calamity and is affecting the production of food and hydropower has made the situation worse, although its currency, the Kwacha has been on the rise despite the odds.

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