Zambia’s creditors pledged to negotiate a restructuring of the country’s debts on Saturday, a move IMF managing director Kristalina Georgieva welcomed as “clearing the way” for a $1.4 billion Fund program.
The creditor committee, co-chaired by China and France, said in a statement released by G20 chair Indonesia that it supported Zambia’s “envisaged IMF upper credit tranche program and its swift adoption by the IMF Executive Board”.
Zambia’s creditor committee said that the restructuring terms would be finalised 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 favourable.
“Very pleased the Official Creditor Committee for Zambia has provided its financial assurances clearing the way for a Fund program,” IMF managing director Kristalina Georgieva said in a tweet.
“This shows the potential of the G20CommonFramework for debt treatment to deliver for countries committed to dealing with their debt problems,” Georgieva said in the tweet.
“The delivery of these financing assurances will enable the IMF Executive Board to consider approval of a Fund-supported program for Zambia and unlock much needed financing from Zambia’s development partners,” Georgieva said in a statement released by the IMF after her tweet.
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 Fund deems sustainable.
Zambia’s government welcomed the creditors’ pledge and its unlocking of IMF support.
“Zambia remains committed to implementing the much needed economic reforms, being transparent about our debt and ensuring fair and equitable treatment of our creditors,” finance minister Situmbeko Musokotwane said.
The first creditor meeting was held in June, after Zambia’s government complained of delays to the restructuring.
Talks are taking place under the Common Framework, a debt relief process launched by the Group of 20 major economies in 2020 that has been criticised by some for being slow to yield results.
Below is the full statement
IMF Managing Director Welcomes the Statement by the Creditor Committee for Zambia under the Common Framework for Debt Treatments
July 30, 2022
Following the statement issued on July 30 by the Creditor Committee for Zambia under the Common Framework for Debt Treatments beyond the DSSI, Ms. Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF), issued the following statement:
“I am very pleased to welcome the statement issued on July 30 by the Official Creditor Committee for Zambia. The support from the Official Creditor Committee for Zambia’s envisaged IMF-supported program, together with its commitment to negotiate debt restructuring terms, accordingly, provides the IMF with official financing assurances. I strongly endorse the call by the Official Creditor Committee for private creditors and other official bilateral creditors to commit to comparable debt treatments.
“The delivery of these financing assurances will enable the IMF Executive Board to consider approval of a Fund-supported program for Zambia and unlock much needed financing from Zambia’s development partners.
“I would like to thank the members of the Creditor Committee for their work on Zambia’s request for a debt treatment. It shows that progress is being made in implementing the G20’s Common Framework and recognizes the strong reform efforts of the Zambian authorities to restore macroeconomic stability and foster higher, more resilient, and inclusive growth. This support for the G20 Common Framework demonstrates that international partners are coming together to help countries resolve their debt issues, sending a strong signal to other countries looking to restore debt sustainability, achieve sustainable growth and poverty reduction.”
On December 3, 2021, IMF staff reached staff level agreement with the Zambian authorities on a new arrangement under the Extended Credit Facility (ECF) for 2022-2025 in the amount of about SDR 980 million or about $1.3 billion.