Zambia's debt restructuring remains snagged on Afreximbank problems

By Marc Jones

LONDON, Sept 19 (Reuters) - Zambia's debt restructuring remains snagged on its thorny negotiations with the African Export-Import Bank and won't be resolved until next year, one of its top finance officials has told Reuters.

Zambia, one of the world's top copper producers but also one of its most indebted nations, struck a writedown deal with its main private sector creditors last June after a 3-1/2-year slog.

But an unresolved issue over whether Afreximbank and the Trade and Development Bank should also take a hit or be spared from writedowns - like the International Monetary Fund and World Bank - has prevented Lusaka from completing the process and exiting default.

"Unfortunately, we are a guinea pig," Zambia's Secretary to the Treasury Felix Nkulukusa said in an interview in London late on Thursday. "Everything is being tested on us."

While more intensive negotiations started with TDB two months' ago, Nkulukusa said there has been little progress with Afrexim, which fears its credit rating will be slashed if it is no longer regarded as having so-called 'preferred creditor status'.

Government-bankrolled and owned development banks typically benefit from it to give them a layer of protection and enable them to lend at cheaper interest rates and for projects that commercial banks might see as too risky and shy away from.