Zambia seeks solution after accidental $80 million payment to China amid debt talks
Zambia's government is working to address a mistaken $80 million payment made by its state-owned power utility, Zesco Ltd., to China, as part of ongoing debt restructuring discussions with the Asian nation.
Zesco had been depositing revenue from electricity sales into a securitised account linked to a power plant built and financed by Chinese companies. However, Secretary to the Treasury Felix Nkulukusa revealed that the utility "unfortunately" transferred approximately $80 million from the account.
This incident comes as Zambia continues negotiations to finalise its debt restructuring process with its creditors. Although the country signed a memorandum of understanding with its official creditor committee—co-chaired by China and France—in October 2023, a final agreement with China remains pending. Only after this agreement is reached can debt payments resume.
The mistaken payment comes amid challenges associated with Zambia's debt restructuring efforts, which began in 2020 after it became the first African country to default during the pandemic. It also highlights the complexities of securitised or escrow accounts often tied to project loans.
In response to the situation, Zambia has proposed that the $80 million payment be treated as an advance on the interest accumulating on its debt to China since 2023. "That is the discussion we have... We’re looking for a solution to that," Nkulukusa stated in an interview on December 8 in the capital, Lusaka.
