Zambia expects debt restructuring deal with creditors by mid-2022

Lusaka — Zambia expects to agree a debt restructuring plan with creditors around the middle of 2022 after reaching a preliminary understanding for a programme with the International Monetary Fund (IMF), finance minister Situmbeko Musokotwane said on Thursday.

Zambia endured Africa’s first Covid-19-era sovereign default in November 2020 after years of chronic government overborrowing drove its debt burden above 120% of annual economic output.

The IMF and Zambia this month reached a staff level agreement on a $1.4bn three-year extended credit facility, bringing the heavily indebted copper producer one step closer to a comprehensive debt overhaul.

“We expect that if all goes well, we should have agreement with creditors in the middle of next year,” Musokotwane said in parliament ahead of the approval of the 2022 national budget.

Musokotwane said Zambia’s economy was in debt distress and the relative stability that it had experienced in the past few months was because most creditors had allowed it to default.

The government of President Hakainde Hichilema, who was elected in August, started talks with the IMF in early November.

Zambia’s external debt includes about $3bn in international bonds, $2.1bn to multilateral lending agencies such as the IMF and another $3bn to China and Chinese entities.

Reuters