A memorandum of understanding on debt reduction is about to be signed by the country’s official creditors, according to Zambia’s finance minister Situmbeko Musokotwane.
During the COVID-19 epidemic in 2020, Zambia became the first African nation to default on its sovereign debt; nonetheless, the government has had difficulty concluding negotiations for the restructuring of its external debt, which at the end of 2017 totaled $18.6 billion.
“We are close but not yet there. By now we should have had an MoU signed by official creditors giving the IMF assurances,” Musokotwane said at a media briefing.
“The creditors… are asking questions. They are all agreed on one thing: assistance will be provided, but the question is how much?” the minister said. “They are saying we must understand because they are losing money.”
Sources told Reuters earlier this week that Zambia’s official creditors were getting closer to signing the memorandum of understanding (MoU) on debt relief in May, a key step to pave the way for more funding from the International Monetary Fund.
China is Zambia’s largest bilateral creditor and many Western officials have blamed it for delays in the restructuring process — a position Beijing strongly denies.
The IMF wants official creditors to outline in the MoU specific modalities of how they intend to deliver debt relief aligned with the parameters of a $1.3 billion 38-month programme approved by the fund’s board in August 2022.
The release of about $188 million – the loan’s second disbursement – is subject to IMF Executive Board approval, with the IMF saying it is contingent upon bilateral creditors reaching a debt restructuring deal.
“Everyone is working very hard to make sure that this money is released. I feel confident that this money will come,” Musokotwane said, referring to the IMF’s next payout.