Zambia is close to signing an agreement to reorganize its loans with official creditors, the International Monetary Fund said, clarifying an earlier comment by the lender’s managing director.
(Bloomberg) — Zambia is close to signing an agreement to reorganize its loans with official creditors, the International Monetary Fund said, clarifying an earlier comment by the lender’s managing director.
The parties are close to finalizing the $6.3 billion deal reached in principle in June, that would pave the way for the disbursement of another portion of a $1.3 billion IMF extended credit facility. IMF Managing Director Kristalina Georgieva earlier on Thursday said that the accord with official creditors, co-led by China and France had been signed.
Zambia’s dollar-denominated bonds rose. The debt due in 2027 added 0.6 cent on the dollar to trade at the highest level since September 2022. The bond maturing in 2024 also advanced to a one-year high. The kwacha currency weakened 0.3% versus the dollar.
The country, which became Africa’s first pandemic-era sovereign defaulter in November 2020, also must sign bilateral agreements with each creditor.
“It is embarrassing to find yourself in debt distress,” Finance Minister Situmbeko Musokotwane said. “Now we can say, we are getting assistance and we need to do something to focus our money on the most vulnerable in society.”
Africa’s second-largest copper producer has yet to conclude restructuring talks with commercial creditors that include holders of $3 billion in eurobonds. They have been awaiting the finalization of the memorandum of understanding before proceeding with their own reorganization, which must be on at-least-as-favorable terms.
Governments of lower-income countries struggling to service their loans have been watching Zambia’s debt restructuring closely, as it’s seen to set a precedent for how deals under the Common Framework might look as China works with traditional creditors of the Paris Club to treat debts. The agreement may mean other nations that follow could reach quicker conclusions.
The agreement “will hopefully be signed next week, we are very close to finalizing it,” Musokotwane said in a separate email statement.
–With assistance from Abeer Abu Omar, Srinivasan Sivabalan, Eric Martin and Alister Bull.
(Updates with currency move in third paragraph.)
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