Zambia debt restructuring ‘ stalled ’ -minister

Country hopes for a formal IMF deal by mid-year

London – Zambia ’ s debt restructuring process has “stalled ” as it awaits the formation of a creditor committee, finance minister Situmbeko Musokotwane said yesterday at the International Monetary Fund (IMF) Spring Meetings.

“We ’ ve been waiting for the committees to sit,” Musokotwane told IMF African Department director Abebe Selassie in a Governor Talk interview broadcast by the fund.

“And while we are here I hope we can get some clarity from you and your colleagues from the World Bank on how we can move forward. Because for now it is stalled,” he continued.

Zambia was the first country to default in the pandemic era, in November 2020, as it buckled under debt of more than 120% of GDP. The debt hit $31.74bn at the end of 2021, 17% higher than six months earlier, according to official Zambian data.

Zambia reached a staff level agreement with the IMF on a $1.4bn, three-year credit facility in December 2021.

Musokotwane, who also described the restructuring as a “stalemate “, told parliament on March 25 that the creditor committee would be announced “within the next few weeks ” and has said he hopes for a formal IMF deal by midyear.

Selassie had asked what the international community could do to address what he described as the “unresolved... debt challenge.”

At a second event yesterday, Musokotwane criticised the Common Framework debt restructuring process, which was launched by the Group of 20 (G20) leading economies in 2020 in response to the coronavirus pandemic.

“Unfortunately, we are now in the fourth month from the time when we thought we would quickly move to the discussion with creditors. Nothing has happened,” he told a side event hosted by the Atlantic Council, a think-tank.

“So we ’ ve come here to complain and also discuss with the leaders of the G20, the leaders of the Common Framework.”

Musokotwane said Zambia had fulfilled its commitments and contrasted the Common Framework process with what he said was the clearer Heavily Indebted Poor Countries (HIPC) debt relief programme first set up by the IMF and World Bank in 1996.

Having signed up for the Common Framework more than a year ago, Ethiopia and Chad have also yet to receive debt relief.