By Amb. Emmanuel Mwamba
What Did Zambia Seek? What Did It Obtain?
…Obtained extension of the maturities on its loans to 20 years….
WHAT DID ZAMBIA SEEK?
Zambia was asking for a debt-write off or debt forgiveness of more than $8billion on its $14.2 billion and a restructure of the rest on its foreign debts owed to Chinese lenders, private bond-holders and other creditors, according to an IMF analysis.
This restructuring widely seen as a test of Beijing’s willingness to absorb losses on loans it has extended to developing countries.
WHAT DID ZAMBIA GET
Zambia reached an agreement in principle to restructure $6.3 billion of debt with bilateral lenders, setting a precedent for a growing list of countries struggling to service their liabilities.
Details remain unclear, beyond that the creditors led by China and France agreed to extend the maturities on their loans over some 20 years, with a three-year grace period.
The IMF wants official creditors to outline in a Memorandum of Understanding (MOU) with the Zambian Government, specific modalities of how they intend to deliver debt relief aligned with the parameters of a $1.3 billion 38-month Extended Credit Facility programme signed off by the fund’s board in August 2022.
Ms. Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), issued the following statement:
“I warmly welcome Minister of Finance Situmbeko Musokotwane’s announcement that the Zambian authorities have reached an agreement with their official creditors on a debt treatment, consistent with the objectives of the IMF-supported program. This unique and innovative agreement specifies both a baseline and a contingent treatment that would be automatically triggered if the assessment of Zambia’s economic performance and policies improves.
“This agreement paves the way for the completion of the first review of Zambia’s three-year Extended Credit Facility Arrangement, which is helping put Zambia on a path toward sustainable economic growth and poverty reduction.”
“I look forward to the Executive Board taking up this review in the coming weeks and the continuation of our productive collaboration with Zambia in the period ahead.”
