Zambia’s Debt Restructuring Progress
Zambia, in the process of restructuring its debt, is close to reaching a memorandum of understanding with its creditors. While it was suggested that the agreement had already been signed, a representative from the International Monetary Fund (IMF) clarified that the deal’s finalization was still pending. This development follows a preliminary agreement reached in June for debt restructuring.
During the annual meetings of the IMF and World Bank, Managing Director Kristalina Georgieva prematurely announced the signing of the agreement. However, a source familiar with the matter revealed that the signing is scheduled for the following week, highlighting the need for additional time to conclude the details of the deal.
G7 Finance Ministers’ Call
The G7 finance ministers, in their discussions during the meetings in Marrakech, urged the swift finalization of the memorandum of understanding for Zambia’s debt restructuring. This is a critical step in the $6.3 billion external debt restructuring process that Zambia agreed to in June. Fulfilling this requirement is necessary for the disbursement of IMF funds to Zambia.
Zambia’s Debt Crisis
Zambia faces a significant debt burden, with a total debt of $32.8 billion, of which $18.6 billion is owed to foreign creditors, predominantly China. The country’s debt has escalated over recent years, partly attributed to ambitious infrastructure projects.
Challenges and reforms
Zambian Finance Minister Situmbeko Musokotwane expressed gratitude to the country’s creditors for their support amid the debt crisis. However, he emphasized that debt restructuring alone isn’t enough to provide the quality of life young Africans aspire to. He stressed the importance of fostering better economic growth to create jobs and opportunities, thus discouraging dangerous migrations across the Sahara and the Mediterranean.
Zambia and the IMF agreed on a $1.3 billion financial assistance program in August 2022. The country successfully passed the first review of this program in July 2023, ensuring that the stipulated reforms are being implemented.