(3 minutes read)
· Zambia set off a process to contract funds from International Monetary Fund (IMF) to fend off its dire resource crunch
· It is seeking support under the IMF’s Extended Credit Facility to tie down its Eurobonds debts amounting to over US$ 3 billion
· The other major debt is the one which it has contracted with China for close to US$ 3 billion. It is reported that the negotiations with the IMF is progressing well
· There are unconfirmed reports that the talks to settle debt contracted with China is also underway, though there is no precise report the content and tenor of the talks
Zambia set off a process to contract funds from the International Monetary Fund (IMF) to fend off its dire resource crunch. It is seeking support under the IMF’s Extended Credit Facility to tie down its Eurobonds debts amounting to over US$ 3 billion. The other major debt is the one which it has contracted with China for close to US$ 3 billion. It is reported that the negotiations with the IMF are progressing well. There are unconfirmed reports that the talks to settle debt contracted with China is also underway, though there is no precise report the content and tenor of the talks.
It may be recalled that Zambia has become the first country to default on sovereign payments in November last year, although the country claimed that it was in a position to repay the debt. But to avail the loan from the IMF, Zambia may have to undergo a restructuring of its economy as generally insisted by the donor organization-the IMF.
These include fiscal reforms to correct large fiscal imbalances, creating opportunities for revenue realization and improving governance. Zambia’s finance minister Bwalya Ng’andu said his government was committed to securing an IMF program and would be working towards restructuring the economy. Analysts predict that the IMF loan might be a life line for the debt ridden country, which is the largest copper producer in Africa.
It is reported that the talks between Zambia’s finance ministry officials and the IMF representatives covered recent economic developments, the near-term macroeconomic challenges, and policy options to return Zambia to a sustainable macroeconomic position over the medium-term. But a few financial experts predict that the tensions between the IMF and the Zambian authorities regarding following the strict discipline is likely to be a spoilsport in the negotiations. It is also not known what would be the approach of the IMF on the restructuring of the Chinese loan of US$ 3 billion. It is also a common knowledge that the tensions between those two groups of creditors – the IMF and China- have so far upset the attempts to restructure Zambia’s debt.
