The International Monetary Fund (IMF) has stated in a recent report that Zambia’s extensive efforts to restructure its external debt, despite significant delays, will result in substantial savings of $7.65 billion for the country by the year 2026. This positive outcome follows the approval of the latest disbursement from a $1.3 billion rescue loan extended to Zambia.
In contrast to the $8.4 billion debt relief initially estimated by the IMF in September, the anticipated savings of $7.65 billion resulting from Zambia’s debt restructuring efforts are slightly lower. This variance in figures arose due to challenges posed by bilateral creditors, including China, as well as international bondholders, who expressed concerns regarding the magnitude of the required debt reductions.
According to a staff report from the IMF, the restructuring of Zambia’s external debt will effectively address 72% of the country’s balance of payments gap from 2022 to 2025, amounting to $7.65 billion. By the close of 2022, Zambia’s overseas debt had reached a substantial sum of $20.9 billion.
In light of Zambia’s achievement in securing a deal with official bilateral creditors, encompassing prominent entities such as members of the Paris Club and China, the International Monetary Fund’s executive board has granted an expedited disbursement of $189 million. This favorable outcome follows the successful completion of the program’s initial review, marking a significant milestone for Zambia’s ongoing efforts to restructure approximately $6.3 billion of its overseas debt.
According to the IMF report, Zambia’s official creditor committee convened on seven occasions since its establishment in June 2022. During this period, the committee conducted several technical workshops to address various matters. Notably, the exclusion of overseas local bondholders from the debt restructuring process emerged as a contentious point of discussion among the committee members.