China in Talks On Emerging Economy Debt Workout Compromise

• China is negotiating a compromise plan with other major creditors that could help break a logjam in debt-relief talks for struggling developing nations, the Wall Street Journal reported on Tuesday.
• The Wall Street Journal said the new plan if agreed upon, could see China drop its demand for multilateral lenders such as the World Bank and International Monetary Fund to join it in taking losses in any debt-restructuring deals that have stood as an obstacle to reaching workouts for countries like Zambia and Ghana.
• Specifically, the new plan could help break an impasse that has held up an agreement between China and other government creditors to restructure the debts of Zambia. It will serve as a model for multibillion-dollar debt-relief deals for other developing countries in financial distress.
• Negotiations could then move on to the details of Zambia’s debt restructuring, such as extending repayment deadlines and lowering interest rates. China continues to oppose taking losses on the face value of its loans, people close to Beijing’s decision-making told the paper.

(Source: Reuters)