IMF chief reiterates help to rescue Zambia from deep debts

(3 minutes read) (Global)

IMF chief Kristalina Georgieva said that she was confident that an agreement to restructure Zambia’s debt was within reach after engaging with the country’s creditors

IMF chief Kristalina Georgieva said that she was confident that an agreement to restructure Zambia’s debt was within reach after engaging with the country’s creditors. This assurance she had given while addressing a gathering at the University of Zambia recently. She dwelt in detail on the IMF’s work in restructuring economies, which are undergoing difficult trajectories.

The IMF chief said that the IMF was keen to see Zambia overcome the debt challenges and that is why in 2021, the IMF agreed to a US$ 1.3 billion at a critical time to bail out the country from a difficult situation and push the country in the growth path. However, she said that there were criticisms levelled against the multilateral organization that it was interfering with the sovereignty of the country by imposing conditions. That was why, despite the agreement to bail out Zambia, further talks were dragged. However, she made it clear that she did not wake up to worry about such criticisms and said that such conditions might be hard in the short time, but in the long term, it helped economies to come out of the hardships they faced.

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The main conditions that were criticised by the loan recipient countries are the rollback of the subsidies and stress on privatisation. These measures, the recipient countries feel are not politically right conditions, which can distance people from the ruling political parties.  Zambia owes US $17 billion in external debt to private lenders including bondholders. It is also heavily indebted to China. It may be recalled that in i2020, Zambia became the first African country to default on its foreign debt since the start of the Covid-19 pandemic. The critical situation had arisen mostly due to the refusal of western lenders to freeze interest payments.