Zambia creditors to commit to debt relief needed for IMF funding

Zambia’s creditors are expected to commit to debt relief needed to unlock $1.4 billion from the IMF on Wednesday or Thursday, two sources familiar with the situation said, as the country and its lenders seek to end a drawn-out restructuring process.

After meeting on Monday, Zambia’s bilateral creditors agreed to release a statement on their position sufficient for the International Monetary Fund’s (IMF) board to sign off on a $1.4 billion three-year program, the sources said.

The creditors are due to release a positive statement, a third source said, without providing further details.

In 2020, Zambia became the first African country to default on its debts in the pandemic era, struggling with external debts that reached $17.27 billion at the end of last year, according to government data.

“The president is eager to see that Zambia’s debt issue is quickly resolved and is happy that progress is being made,” presidential spokesman Anthony Bwalya told Reuters on Wednesday, without giving details.

“I’m hopeful that Zambia may be able to get debt relief in the next few days,” World Bank President David Malpass told Bloomberg TV on Tuesday. “There was just a creditors meeting yesterday so that gives some sign of hope.”

Zambia reached a staff-level agreement with the IMF on the $1.4 billion extended credit facility in December, but will not get the money until it agrees with its creditors to reduce the debt to sustainable levels.

The first creditor meeting was held in June, after Zambia’s government complained of delays to the restructuring, which is taking place under the Common Framework, a debt relief process launched in 2020 by the Group of 20 major economies that is yet to show results.

Chad’s Common Framework creditor committee met last week and Ethiopia’s on Tuesday, with the IMF calling on lenders to reach agreements quickly.