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Zambia agrees $6.3 billion debt restructuring deal with bilateral creditors

Published

1 year ago

October 14, 2023

Zambia’s finance ministry Saturday said the country had agreed to a memorandum of understanding (MoU) with its bilateral creditors on restructuring about $6.3 billion of debt.

The agreement comes almost three years after the southern African country defaulted, being the first African country to default on its debt in the pandemic era.

The ministry, in a statement, said, “Each official creditor will now begin their internal process to sign the MoU. Following the signing of the MoU, the terms will be implemented through bilateral agreements with each member of the OCC (Official Creditor Committee).”

Last month, Zambian President, Hakainde Hichilema visited China as part of moves to restructure the country’s external debt. China is a major creditor to Zambia as around two-thirds of the $6.3 billion debt Zambia is seeking restructuring with is owed to the Export-Import Bank of China.

With interest rates set at 1% for the first 14 years and rising to up to 2.5% after that, the agreements will involve an average extension of debt maturities of more than 12 years. Increasing payments is possible if Zambia’s economy performs better than anticipated.

Zambia’s finance minister, Situmbeko Musokotwane, said, “The next step is to secure a comparable agreement with our private creditors.”

Musokotwane added, “We are grateful to all our official creditors, especially the co-chairs of the committee, China and France, and vice-chair South Africa, for their commitment to help resolve Zambia’s debt overhang.”

Compared to the over $6 billion that Zambia had owed to official creditors before to the debt restructuring, Zambia will pay about $750 million over the next ten years.

The ministry also stated that unless Zambia obtained a debt arrangement with provisions similar to the official creditor agreement, it was committed to continuing to be in arrears to its external commercial creditors.

Related Topics:Debt restructuring Featured IMF Zambia

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IMF mission concludes 4th loan program assessment in Egypt

Published

1 day ago

November 22, 2024

Ifeoluwa Dada

Following the completion of a recent visit to Egypt, the International Monetary Fund (IMF) has announced that its mission had achieved significant strides in policy talks aimed at concluding the fourth review of the IMF loan program.

The review is the fourth in Egypt’s most recent 46-month IMF loan program, which was authorised in 2022 and increased to $8 billion this year following an economic crisis characterised by high inflation and chronic foreign exchange shortages. It may unleash more than $1.2 billion in financing.

Along with reaffirming its commitment to maintain a flexible exchange rate system, the IMF stated that Egypt “has implemented key reforms to preserve macroeconomic stability,” including the unification of the currency rate that facilitated imports.

Earlier on Wednesday, Egypt’s Prime Minister Mostafa Madbouly said Cairo has asked the IMF to modify the targets for the programme not only for this year, but for its full duration, he added without giving more details.

“Discussions will continue over the coming days to finalize agreement on the remaining policies and reforms that could support the completion of the fourth review,” the IMF added in its statement.

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Kenya seeks $750m from World Bank, obtains $200m from AfDB— Official

Published

3 days ago

November 20, 2024

Ifeoluwa Dada

The head of debt management for the finance ministry told Reuters that Kenya had obtained a $200 million loan from the African Development Bank (AfDB) and was negotiating a fresh $750 million loan with the World Bank.

After being forced to abandon proposed tax rises costing more than 346 billion shillings ($2.68 billion) in June due to fatal demonstrations, the East African nation’s administration, which has been grappling with significant debt, has been frantically seeking fresh funding.

The Finance Ministry’s public debt management office director general, Raphael Owino, told Reuters that the IMF’s October clearance of the seventh and eighth reviews, which opened the door for a $606 million loan tranche, had aided the ministry’s talks for more loans.

“The World Bank is coming on board, riding on the back of IMF receipts,” Owino said. “The AfDB is already on board.”

The discussions for more assistance, which came under the World Bank’s “Development Policy Operations” (DPO) with the government, were confirmed by a representative at the organization’s Kenya office.

“The amount of the current (loan) is yet to be determined. The amount will also depend on the implementation of the policy reforms agreed upon,” the spokesperson told Reuters, adding that past DPO loans averaged about $750 million.

In May, the World Bank approved the latest round of DPO loans, totalling $1.2 billion.

According to a statement made last month by Finance Minister John Mbadi, Kenya has set a foreign borrowing goal of 168 billion shillings for the fiscal year ending in June 2025.