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Zambia is close to concluding a memorandum of understanding with its creditors to avail of the loan to bail out the country from extreme resource crunch. It may be recalled that a preliminary agreement was signed in June to restructure part of its debt. The signing of the MOU, which is yet to reach the final stage, is expected to be sealed very soon, according to IMF sources.
Zambia is close to concluding a memorandum of understanding with its creditors to avail of the loan to bail out the country from extreme resource crunch. It may be recalled that a preliminary agreement was signed in June to restructure part of its debt. The signing of the MOU, which is yet to reach the final stage, is expected to be sealed very soon, according to IMF sources.
According to IMF officials, Zambia is close to concluding a memorandum of understanding with its creditors to avail the loan to bail out the country from extreme resource crunch. It may be recalled that a preliminary agreement was signed in June to restructure part of its debt. The signing of the MOU, which is yet to reach the final stage, is expected to be sealed very soon, according to IMF sources.
Earlier, the IMF sources said that the agreement had finally been signed and there were reports that the IMF Managing Director Mrs. Georgieva had welcomed the MOU. Later, it was found to be a premature announcement, since the final shape of the agreement was yet to be finalized. The Fund-Bank meeting is taking place in Marrakesh, Morocco and it will continue till Sunday. The latest news is that the MOU, which has been under negotiation for a long time, will be finally signed next week., upon Zambia producing a credible debt restructuring plan.
The G7 finance ministers called for the finalization of the memorandum of understanding on the restructuring of Zambia’s debt as quickly as possible in order to validate the agreement in principle signed in June to restructure US$6.3 billion of external debt. Restructuring of debt was one of the conditions set out by the IMF in order to release all disbursements.
Zambian Finance Minister Situmbeko Musokotwane recalled agonies the southern African country has undergone due to the mounting debt. The present dispensation accused the earlier government of the crisis because of its fiscal profligacy, particularly in sinking huge funds in infrastructure development. He also underlined the need for a better growth plan that creates jobs so that Zambia no longer has young people trying to migrate to other destinations in search of jobs.
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Zambia’s debt is estimated at US$32.8 billion, of which US$18.6 billion is owed to foreign creditors such as China, its main lender. It was the first African country to default on its sovereign debt in 2020, following the outbreak of the Covid-19 pandemic. Zambia had reached an agreement with the IMF for a $1.3 billion aid program in August 2022.
