Zambia’s Creditors May Sign Debt Relief MOU in May

Zambia’s official creditors met on Tuesday to discuss its international debt, with sources suggesting the country’s creditors are getting closer to signing a Memorandum of Understanding (MoU) regarding debt relief.

In November 2020, Zambia defaulted on $18 billion in foreign-currency debt, becoming the first major country to do so during the Covid pandemic. However, the country’s creditors are yet to agree on its repayment terms.

Zambia’s external debt is split roughly three ways: one third is owed to Chinese lenders, another to private creditors, and the rest to other governments and multilateral lenders, such the World Bank and International Monetary Fund (IMF).

Regarding Tuesday’s meeting, a source to Reuters, “There was progress and the next meeting is in two or three weeks time and MoU is expected to be signed”. This points to May as the months in which the MoU will be agreed between the government and creditors.

This was confirmed by another source. “Agreement was reached on nearly all the issues that were holding back progress and the MoU is likely to be signed next month”.

The situation continues its damaging effects on the Zambian economy: the kwacha has lost almost a third of its value over the last six months; annual per capita income dropped $400 from 2018 to 2021; and nearly two-thirds of the population live on less that $2.15 a day.

Photo: Reuters / Yuri Gripas