MARRAKESH: Zambia has successfully reached a long-anticipated debt agreement with its foreign creditors, as announced by the country’s finance ministry during an IMF-World Bank annual meeting in Marrakesh, Morocco.
This development brings financial relief to Zambia, which, in 2020, became the first African nation to default on its debt following the outbreak of the Covid-19 pandemic.
The finance ministry stated, “The Ministry of Finance…is pleased to announce that a Memorandum of Understanding (MoU) has been agreed with its Official Creditor Committee (OCC) on the comprehensive debt treatment. Each official creditor will now begin their internal process to sign the MoU.”
In June, Zambia had already reached a preliminary agreement with its creditors, which include both China and Western nations, involving $6.3 billion of its debt. However, the finalization of the deal was pending.
Earlier this week, the International Monetary Fund (IMF) indicated that the agreement was expected to be signed soon, despite its chief prematurely announcing its signing.
Deal a Major Step Towards Zambia’s Economic Recovery
Zambian Finance Minister Situmbeko Musokotwane explained, “The next step is to secure a comparable agreement with our private creditors. The government is unwavering in its dedication to addressing the increasing debt burden that has been stifling our economy. We take pride in the substantial progress we have achieved thus far. Upon the successful completion of the debt restructuring process, essential resources will be released, enabling the government to allocate them towards our development initiatives.
Concerns about debt issues in low-income nations have been a focal point of discussions during the IMF-World Bank meetings in Marrakesh, marking the first time these meetings have been held in Africa since 1973.
The worldwide increase in interest rates by central banks, aimed at curbing post-pandemic inflation, has taken center stage in global financial discussions. Zambia, with a total debt of $32.8 billion at the end of 2022, had defaulted on its $18.6 billion foreign debt in 2020 during the height of the Covid-19 pandemic.
2024 #IMFWB ANNUAL MEETINGS – I want to congratulate Zambia for progress in implementing reforms under the IMF enhanced credit facility & for steps taken in debt restructuring process – Kristalina Georgieva, IMF Managing Director, IMF World Bank Annual Meetings, Marrakech,… pic.twitter.com/tOIkTzXM5p
— Ministry of Finance & National Planning – Zambia (@mofnpzambia) October 11, 2023
