China in talks on emerging economy debt workout compromise -WSJ

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.

Citing people familiar with the talks, the Journal said the new plan, if agreed, 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 has stood as an obstacle to reaching workouts for countries like Zambia and Ghana.

That concession would be in return for multilateral lenders and regional partners such as the Asian Development Bank and African Development Bank making more explicit commitments to provide fresh low-cost financing, including grants, to countries whose debt is being restructured, the Journal said.

Specifically, the new plan could help break an impasse that has held up an agreement by China and other government creditors to restructure the debts of Zambia and serve as a model for multibillion-dollar debt-relief deals for other developing countries in financial distress, the people told the Journal.

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.

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