IMF anticipates no further relief needed for Zambia post-debt programme

1:42 pm Wednesday, September 07th, 2022

By Chris Mfula

LUSAKA (Reuters) – The International Monetary Fund (IMF) does not anticipate any relief for Zambia after the end of a 2022-2025 debt programme, its mission chief Allison Holland said at a briefing on Wednesday.

Zambia is seeking $8.4 billion of debt relief from 2022 to 2025, the IMF said on Tuesday in a report in a report on the first African country to default on its debt in the pandemic era.

Zambia is struggling with debt that reached 120% of its GDP and its debt restructuring is seen as a test case for the Group of 20 leading economies Common Framework process, which has been criticised for delays.

“We don’t anticipate any relief for Zambia post-programme,” Holland said in an online media briefing.

“We expect the debt relief to be provided now will be sufficient to meet the need … of the goals that we have outlined,” she said.

Holland said Zambian authorities outlined a goal to have a memorandum of understanding with the official creditor committee by the end of 2022.

“The memorandum of understanding will be a joint agreement and Zambia will have to reach specific bilateral agreements with all the bilateral creditors to operationalise it,” she said.

“The targets that we have set for the debt relief encompass the whole of Zambia’s debt,” Holland said.

Separately, Finance Permanent Secretary Mukuli Chikuba told reporters Zambia would have needed to pay 70 billion Zambian Kwachas ($4.53 billion) in debt servicing this year out of an available 100 billion kwacha.

The debt service payment for 2023 was estimated slightly lower at 62 billion kwacha, he said.

“This is the amount of money that we need to restructure of the $14.6 billion,” Chikuba said, referring to the central government external debt, including guarantees.

The debt restructuring would take the form of haircuts, extended maturity periods and interest adjustments, Chikuba said.

($1 = 15.4632 Zambian kwachas)

(Additional reporting by Anait Miridzhanian; Writing by Nellie Peyton; Editing by James Macharia Chege and Jane Merriman)