IMF Chief Prematurely Announces Zambia Debt Deal

Zambia is close to signing a long-sought debt deal with its foreign creditors, an IMF spokesperson said Thursday after the institution's chief prematurely announced it was signed

Marrakesh, (UrduPoint / Pakistan Point News - 13th Oct, 2023) Zambia is close to signing a long-sought debt deal with its foreign creditors, an IMF spokesperson said Thursday after the institution's chief prematurely announced it was signed.

Zambia reached an agreement in principle with its creditors, which includes China and Western nations, on $6.3 billion of its debt in June but it has yet to be signed.

The managing director of the International Monetary Fund, Kristalina Georgieva, announced at the IMF-World Bank annual meetings in Marrakesh, Morocco, on Wednesday that a memorandum of understanding between Zambia and its lenders "has finally been signed."

But an IMF spokesperson later said that the agreement was only reached "in principle" and that "the signing of the MoU is expected soon."

"A round of applause for Zambia," Georgieva said after making the mistaken announcement at a panel discussion on tackling debt around the world that also featured Zambian Finance Minister Situmbeko Musokotwane.

"The creditors have been wonderful," Musokotwane said, thanking a committee of lenders led by China, France and South Africa.

"But that by itself is not enough to provide the kind of life that these young people in Africa want to live," he said.

"What will deliver that? Higher economic growth to create jobs so that we no longer have youth crossing the Sahara, over the Mediterranean.

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Zambia, whose total debt amounted to $32.8 billion at the end of 2022, defaulted on its $18.6 billion foreign debt in 2020 at the height of the Covid-19 pandemic.

Concerns over debt in low-income nations has been at the forefront of talks of the IMF-World Bank meetings in Marrakesh, the first to be held in Africa since 1973.

"Let me tell you that it is embarrassing to find yourself in debt distress," Musokotwane said.

Central banks worldwide have raised interest rates in efforts to tame inflation, which rose after Covid restrictions were lifted and jumped higher after Russia invaded Ukraine.

- Sri Lanka near deal -

Sri Lanka has also been negotiating a debt deal with creditors at the Marrakesh meetings.

"We are on the verge of finding an agreement on the debt with Sri Lanka," French Finance Minister Bruno Le Maire told reporters earlier.

Sri Lanka reached a tentative agreement on restructuring its debt with China earlier this week.

The government defaulted on its $46 billion debt last year at a time when months of food and fuel shortages were making life a misery for Sri Lanka's 22 million people.

Zambian President Hakainde Hichilema visited China, the country's main creditor, last month.

lth/giv