IMF says debt plan should unblock $1.3 billion for Zambia

WASHINGTON — The International Monetary Fund (IMF) said on Saturday that an agreement by Zambia's creditors to restructure the African country's crushing debt load has helped clear the way for the release of $1.3 billion in IMF-support funds.

Managing director Kristina Georgieva said she welcomed a statement from the Official Creditor Committee for Zambia, which has met virtually under join French-Chinese leadership with IMF and World Bank staff observing. 

Its support "for Zambia's envisaged IMF-supported programme, together with its commitment to negotiate debt restructuring terms, accordingly, provides the IMF with official financing assurances", Georgieva said. 

She said she strongly endorsed the committee's call "for private creditors and other official bilateral creditors to commit to comparable debt treatments".

The restructuring, the IMF said, should involve the same terms for creditor countries and private lenders — in exchange for Lusaka's commitment to undertake profound economic reform.

In 2020, as the COVID-19 pandemic battered Africa, Zambia became the first country on the continent to default on its foreign debt — estimated at $17.3 billion.

Last December, Zambia reached tentative agreement with IMF staff to provide $1.3 billion in support funds, but only if it took credible steps to reduce its debt load to levels deemed sustainable.

In a statement Saturday, Georgieva said that the IMF Executive Board could now "consider approval of a Fund-supported program for Zambia and unlock much-needed financing from Zambia's development partners".

The IMF chief added: "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."

Lusaka, for its part, welcomed the official progress.

Finance Minister Situmbeko Musokotwane said in a statement that Zambia was committed to implementing necessary reforms, to being transparent about its debt, and to dealing with its creditors in a fair and equitable way.

Since the election last year of President Hakainde Hichilema, the country has made progress in restoring relations with donors.