Zambia debt deal with creditors "imminent", says IMF

10 Oct 2023

The International Monetary Fund's director of Africa said he is "hopeful" that Zambia and its official creditors would reach a finalised debt restructuring deal before Thursday.

"We're very hopeful that the authorities and the creditors will be in a position to make an announcement very, very soon," Abebe Selassie told Reuters news agency during an interview on the sidelines of the IMF and World Bank annual meetings in Marrakech.

Describing a deal as "imminent", Selassie added: "I'm very optimistic. The ball is in the authorities' court. It's between the authorities and their creditors. They've told us that they've made very, very good progress."

The deal would involve the signing of a memorandum of understanding to restructure $6.3 billion of debt. Since June, the government has made slow progress after it reached a deal-in-principle with the committee co-led by China and France, Bloomberg reports.

At the end of last month, Zambia's Finance Minister Situmbeko Musokotwane said he forecast the memorandum to be "finalised and executed before the end of the year."

Under the agreement, interest rates would be slashed to as low as 1%, with loans repaid in 2043, as well as a 40% reduction in the net-present value of the debt, it was reported last week.

After becoming the first country in Africa to default during the pandemic in 2020, Zambia has struggled to come to an agreement with creditors. Earlier in the year, the IMF withheld close to a $190 million disbursement due to the ongoing delays in reaching a deal to secure debt relief, with China being Zambia's largest bilateral creditor.

Furthermore, last week, Zambia's international bondholders formally began debt discussions with the government, a crucial step in restructuring over $3 billion of overseas bonds, sources told Reuters.