Zambia Debt Relief Pledge Clears Way For IMF Project

Zambia’s creditors pledged to negotiate a restructuring of the country’s debts on Saturday, a move International Monetary Fund managing director Kristalina Georgieva welcomed as “clearing the way” for a $1.4 billion IMF program.

The creditor committee, co-chaired by China and France, said in a statement released by G-20 chair Indonesia that it supported Zambia’s “envisaged IMF upper credit tranche program and its swift adoption by the IMF Executive Board.”

In 2020, Zambia became the first African country in the pandemic era to default. The restructuring of its external debt, which amounted to more than $17 billion at the end of 2021, is seen by many analysts as a test case.

Zambia reached a staff-level agreement with the IMF on a $1.4 billion, three-year extended credit facility in December, conditional upon its ability to reduce debt to levels the IMF deems sustainable.

Zambia’s government welcomed the creditors’ pledge and its unlocking of IMF support.

On Friday, the finance ministry said it was canceling $2 billion in undisbursed loans.

Zambia’s creditor committee said that the restructuring terms would be finalized in a memorandum of understanding, without providing further details.

It also called on private creditors to “commit without delay” to negotiating debt relief on terms at least as favorable.

Kevin Daly, who chairs a committee of holders of Zambia’s Eurobonds, welcomed the bilateral creditors’ statement, but repeated a call to be given access to the IMF’s Debt Sustainability Analysis (DSA), which forms the basis of negotiations.