Zambia / IMF: The country signs a debt agreement with its creditors

Zambia, which had been in negotiations for two years to reach an agreement to restructure a portion of its debt, signed a memorandum of understanding (MoU) with all of its bilateral creditors on Thursday, October 12, announced the Managing Director of the IMF, Kristalina Georgieva.

The agreement has «finally been signed», said Kristalina Georgieva during a roundtable discussion at the annual meetings of the International Monetary Fund (IMF) and the World Bank, which are taking place in Marrakech, Morocco, until Sunday.

This marks the final step to validate the initial agreement signed in June to restructure $6.3 billion of external debt, one of the conditions outlined by the IMF in its assistance program with Zambia to unlock all disbursements.

«Our creditors have been wonderful, and we thank them all for giving us this opportunity», said Zambia’s Finance Minister, Situmbeko Musokotwane, who noted how embarrassing it is to find themselves in a debt crisis.

However, he added that such an agreement «is not enough to provide the kind of life that young Africans want to live».

He emphasized the need for «better growth that creates jobs so that we no longer have young people trying to cross the Sahara and the Mediterranean».

Zambia’s debt, which has surged in recent years, is estimated at $32.8 billion, of which $18.6 billion is owed to foreign creditors, including China, its largest lender.

Zambia became the first African country to default on its debt in 2020 following the outbreak of the COVID-19 pandemic.

Former Zambian President Edgar Lungu is accused of embarking on heavy infrastructure projects and overindebting the country with China (to the tune of $4.1 billion), which is building airports, roads, schools, factories, and even police stations in the country.

«If you combine what we spend on public servant salaries and servicing this debt, it accounts for more than 90% of tax revenues collected. Now that we’ve received assistance, we can direct the money toward the most vulnerable», added Situmbeko Musokotwane.

Zambia had reached an agreement with the IMF for a $1.3 billion assistance program in August 2022 and successfully passed the first review, which allows the IMF to ensure the implementation of the reforms outlined in the program, completed in July 2023.

Pedro OKALAMAR