Zambia has clinched a deal to restructure more than $6 billion in debts owed to other governments, a French official said on Thursday, in a long-awaited breakthrough to ease pressure on the southern African country's strained public finances, as Reuters reported.
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Zambia in 2020 became the first African country to default on its sovereign debt during the COVID-19 pandemic and has struggled since in protracted negotiations to agree on a deal on the $12.8bn of external debt it was trying to restructure.
"We have reached an agreement on the outline of a debt treatment, we've reached the end of the negotiation," the French official, who did not wish to be identified, told journalists.
Zambia's public sector creditors agreed to reschedule $6.3bn, including $1.3bn in arrears, and private sector creditors are expected to do the same on the $6.8bn owed to them, the official said.
"We've already spoken to representatives of the private sector and they know what to expect, that they will have to restructure and make a comparable effort," the official added.
The agreement calls for Zambia's debt to be rescheduled over more than 20 years with a three-year grace period during which only payments on interest are due.
The restructuring agreement with official creditors paves the way for Zambia to receive another $188 million tranche of money from the International Monetary Fund, part of a $1.3bn package approved in August 2022.
“This agreement paves the way for the completion of the first review of Zambia’s three-year Extended Credit Facility Arrangement, which is helping put Zambia on a path toward sustainable economic growth and poverty reduction," Kristalina Georgieva, managing director of the International Monetary Fund, said in a written statement.
Of the $6.3bn in debt owed to government bodies, $4.1bn was owed specifically to Export-Import Bank of China, the French official said.
"I am pleased that the international community has come together to support Zambia in its time of need," U.S. Treasury Secretary Janet Yellen said in a statement.
"I urge all official bilateral and private sector creditors to quickly finalize the debt restructuring process that will provide relief to Zambian families and encourage the private investment that is needed to jump start the economy."
Zambian President Hakainde Hichilema was one of about 40 leaders attending a summit in France on Thursday and Friday aimed at easing the debt burden on some of the world's most vulnerable countries while freeing upbns of dollars in new funds for climate finance. ■
Under an intense surge of arctic air, Friday morning will begin with the coldest temperatures so far this season across much of the central and eastern U.S. with blustery conditions and a piercing wind chill.