Zambia and France have signed a bilateral debt restructuring agreement, marking an important milestone in a lengthy process that began when the southern African nation defaulted four years ago.

This agreement is part of Zambia's efforts to reorganise approximately $13 billion in external debt, following its status as the first African country to default during the Covid-19 pandemic in 2020.

“Three years ago, Zambia was a basket case,” said the country’s finance minister, Situmbeko Musokotwane during the signing event in Lusaka on Sunday, along with French representative William Roos. “What we are signing here this evening is really a landmark.” 

The agreement with France is the first debt restructuring deal Zambia has signed with official bilateral creditors, including China, Saudi Arabia, and India, Bloomberg reports.

It is also the first under the Group of 20's Common Framework for debt restructuring, a process criticised for its slow pace in coordinating diverse creditor groups.

Under the terms of the deal, Zambia will extend the maturity of its debt by an average of 12 years, pushing it beyond 2040.

According to Musokotwane, interest rates will be set at 1% for the next 14 years, with a cap of 2.5% thereafter under the baseline restructuring scenario.

Furthermore, the finance minister expressed his gratitude to the French government, the G20, and the Paris Club for their commitment to achieving a fair and effective resolution to Zambia's debt challenges. 

He noted that the agreement was made possible after President Hakainde Hichilema's meeting with French President Emmanuel Macron, which played a crucial role in facilitating the restructuring of the country's debt.

Musokotwane stated that the agreement will help alleviate the country’s financial pressures, whilst Roos said that the deal demonstrates France's support for Zambia by assisting in the restructuring of its debt. 

He went on to recognise the importance of collaboration between the two nations, noting that it fosters trust and creates valuable space for further cooperation.