Zambia has reached a pivotal milestone by successfully negotiating a debt agreement with its foreign creditors. The official announcement was made during the IMF-World Bank annual meeting in Marrakesh, Morocco, signifying a major step toward the country’s financial recovery.
Zambia faced a challenging financial journey, being the first African nation to default on its debt in 2020 due to the economic repercussions of the COVID-19 pandemic.
The Ministry of Finance expressed its satisfaction in a statement, “We are pleased to announce the successful signing of a Memorandum of Understanding (MoU) with the Official Creditor Committee (OCC) for a comprehensive debt resolution.”
This marks a significant turning point, with each official creditor now commencing their internal processes to formalize the MoU. The initial agreement, in principle, was reached in June, encompassing a substantial $6.3 billion debt, involving both China and Western nations as creditors.
Despite a previous announcement by the IMF’s chief regarding the agreement’s status, the International Monetary Fund confirmed this week that the deal is nearing its finalization.
Zambia’s Finance Minister, Situmbeko Musokotwane, expressed optimism about the future. He said, “Our next priority is to secure a similar agreement with our private creditors. Our government is dedicated to resolving the debt crisis that has weighed down our economy. We are proud of the substantial progress we have made so far. Once this debt restructuring is completed, it will release crucial resources, enabling our government to invest in our development agenda.”
During the ongoing IMF-World Bank meetings in Marrakesh, discussions have prominently centered on the debt concerns in low-income nations. This marks a historic occasion, as these meetings have returned to Africa for the first time since 1973.
Amid the backdrop of global inflation concerns, spurred by the lifting of COVID-19 restrictions and the Russia-Ukraine conflict, central banks worldwide have raised interest rates.
Zambia’s total debt had reached $32.8 billion by the end of 2022, with the country defaulting on $18.6 billion of foreign debt in 2020. The newly secured agreement represents a significant step towards economic recovery for Zambia and alleviates the burden of its financial challenges.
Photo(https://www.lusakatimes.com/)
By: Montel Kamau
Serrari Financial Analyst
14th October, 2023
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