Zambia has signed a long-sought debt deal with its foreign lenders, the IMF’s chief announced Thursday, providing financial relief to the first African nation to default after the Covid pandemic.
Zambia had reached an agreement in principle with its creditors, which includes China and Western nations, on $6.3 billion of its debt in June, China and South Africa, but it had yet to be finalised.
A memorandum of understanding with Zambia creditors “has finally been signed”, International Monetary Fund Managing Director Kristalina Georgieva said at the IMF-World Bank annual meeting in Marrakesh, Morocco.
“A round of applause for Zambia,” she said at a panel discussion on tackling debt around the world, which also featured Zambian Finance Minister Situmbeko Musokotwane.
“The creditors have been wonderful,” Musokotwane said, thanking a committee of lenders led by China, France and South Africa.
“But that by itself is not enough to provide the kind of life that these young people in Africa want to live,” he said
“What will deliver that? Higher economic growth to create jobs so that we no longer have youth crossing the Sahara, over the Mediterranean.”
Concerns over debt in low-income nations has been at the forefront of talks of the IMF-World Bank meetings in Marrakesh, the first to be held in Africa since 1973.
Central banks worldwide have raised interest rates in efforts to tame inflation, which rose after Covid restrictions were lifted and jumped higher after Russia invaded Ukraine.
Zambia, whose total debt amounted to $32.8 billion at the end of 2022, defaulted on its $18.6 billion foreign debt in 2020 at the height of the Covid-19 pandemic.
“Let me tell you that it is embarrassing to find yourself in debt distress,” Musokotwane said.
The lead comes a month after Zambian President Hakainde Hichilema visited China, the country’s main creditor.
Sri Lanka has also been negotiating a debt deal with creditors at the Marrakesh meetings.
“We are on the verge of finding an agreement on the debt with Sri Lanka,” French Finance Minister Bruno Le Maire told reporters earlier.
Sri Lanka reached a tentative agreement on restructuring its debt with China earlier this week.
The government defaulted on its $46 billion debt last year at a time when months of food and fuel shortages were making life a misery for Sri Lanka’s 22 million people.
