Creditors To Offer Zambia Financial Assurances By End Of July

Zambia’s official creditors committee is expected to offer the country financial assurances by the end of the month, paving the way for a full debt-restructuring deal under the G20 framework, according to sources close to the committee.

The creditor committees of Zambia, Chad, and Ethiopia are all due to meet this month, amid growing pressure to accelerate the debt restructuring process. If accepted, Zambia would be the first of the three countries to qualify for debt relief under the G20 Common Framework, which was set up during the height of the Covid-19 pandemic.  

The New Dawn government has prioritised restructuring Zambia’s debts since it came into office in August 2021. In December, it secured a staff-level deal with the IMF for a $1.4 billion extended credit facility. Since then, it has been involved in high-level discussions with the IMF and World Bank to secure a full debt restructuring package, which would unshackle Zambia’s economy and free up funds for infrastructure and social security projects.

Significant progress was made in April, when Zambia’s largest creditor, China, agreed to co-chair the country’s official creditor committee. China – which is now the world’s largest sovereign creditor – has since been highly vocal in calling for the IMF to grant Zambia a full bailout.

Last week, a source from the Paris Club on debt sustainability told reporters that wealthy creditor nations are working on providing financing assurances to the IMF that could unlock funds for Zambia.

“We hope that that can be done before the end of July,” they said.