(Bloomberg) --

Zambia may owe Chinese creditors almost double the amount the government has previously disclosed, complicating restructuring negotiations, a study found. 

The Johns Hopkins’ China Africa Research Initiative estimates the nation’s total liabilities to Chinese lenders at $6.6 billion and spread across at least 18 creditors, according to a report published Tuesday. That compares with an official figure of $3.4 billion.

The finding doesn’t mean that Zambia’s total external public and publicly guaranteed debt is bigger than the $14.3 billion reported as of December 2020, according to the report by Deborah Brautigam and Yinxuan Wang. It does show, however, that the government wasn’t transparent about how much of that was owed to Chinese creditors, they said. 

The large proportion of debt to China could make restructuring talks more fraught for creditors including the holders of $3 billion in dollar bonds. Zambia became Africa’s first coronavirus-era default in November, and new President Hakainde Hichilema is pushing for a quick agreement for support from the International Monetary Fund to allow for the talks to proceed. 

“Given the complicated situation with at least 18 Chinese lenders having provided external loan funding to the Zambian government and its state-owned firms, reaching consensus on burden-sharing is likely to prove exceptionally difficult,” the researchers said in the report. The study was based on public information and interviews. 

Zambia’s Eurobonds and its currency have rallied since Hichilema beat incumbent Edgar Lungu in August’s election, partly on expectations of a resolution to the debt impasse. 

Not Transparent

While the Zambian finance ministry has recorded the debts to Chinese lenders under its total external obligations, it included some of them under a category called “Others,” which makes up nearly a third of the public external borrowing, according to the report. 

The ministry and the Chinese embassy in Lusaka, the capital, didn’t immediately respond to emailed requests for comment.

There have long been questions about the true level of state indebtedness in Zambia. Hichilema has said his predecessor’s administration may have hid the full extent of the debt burden. 

Zambia may have also contravened the World Bank’s International Debt Statistics guidelines by not reporting to the Washington-based lender international borrowing by its state-owned companies, according to the study. 

IMF staff started a technical visit to the country this week. Finance Minister Situmbeko Musokotwane’s budget speech, expected before the end of October, should indicate how soon the government can strike a deal with the lender.

The nation’s total external debt, excluding state companies, rose to $12.9 billion as of June 30, while arrears climbed to $1.48 billion, according to the finance ministry. 

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