Narrative
Full Description
Project narrative
On 3 February 2007, the Chinese Government signed an agreement cancelling the Government of Zambia’s outstanding debt obligations resulting from multiple interest-free loans that it had previously contracted. In total, China’s Ministry of Commerce identifies RMB 86 million as the total value of the debt forgiveness that was provided (RMB 61.3 million and USD $3 million). These interest-free loans all had final maturity dates before December 2005.
Staff comments
A 2007 Economic Report published by the Government of Zambia indicates that “the stock of debt owed to the bilateral creditors reduced by 27.3 percent to US $287.0 million due to debt cancellations by China.” This implies a substantially greater value of debt forgiveness from the Chinese Government. However, AidData has not identified any corroborating sources that confirm a higher level of debt forgiveness. One possible explanation is that the Chinese Government did follow through on the debt forgiveness pledge that it made in 2006 (see Record ID#2272). China made a concerted effort in 2007 to forgive the debt from interest-free loans maturing by the end of 2005 to heavily-indebted African countries (http://kp.china-embassy.org/chn//zgxw/zgzxxw/t293317.htm). Since interest-free loans usually have 20 year maturities (http://www.gov.cn/zwgk/2011-04/21/content_1850553.htm), we have assumed the loans included in this debt forgiveness package would have been contracted before 2000. As such, this project is not marked as umbrella, as there is little risk of double counting.