Zambia: A Case Study of Sovereign Debt Restructuring under the G20 Common Framework

Having its public debt written off as part of the Heavily Indebted Poor Countries initiative in 2005, Zambia welcomed significant investment in the late 2000s, particularly from Chinese state-owned banks, to propel economic development and diversify its economy beyond natural resources. While these investments have contributed to economic development, they have also raised debt levels and interest payments that eventually triggered a sovereign default in December 2020. What followed—Zambia’s 2020-24 sovereign debt restructuring under the G20 Common Framework—was an epic story of protracted and back-and-forth negotiations among various stakeholders that kept the Zambian economy in standstill for over 3.5 years. It also highlighted the weaknesses of the Common Framework, which are by now largely acknowledged by the development community. This paper details Zambia’s experience with restructuring its sovereign debt and highlights areas where reform of the Common Framework could be pursued to benefit low-income countries in debt distress in the future.