IMF Managing Director Confident of Zambia Debt Restructuring

IMF Chief Kristalina Georgieva announced on Tuesday 24th January that the International Monetary Fund had reached an understanding in principle with China, whereby Zambia’s debt with China would be part of the IMF’s debt restructuring strategy.

Georgieva revealed the progress with China while in Lusaka for a three-day trip to Zambia. Zambia was the first African country to default on its sovereign debt during the COVID-19 pandemic, and was also one of the first to secure an IMF loan and debt relief package in August 2022.

Since the election of President Hichilema and his New Dawn Government in August 2021, Zambia’s economy has begun an impressive recovery. While at the University of Zambia, Georgieva observed, “Zambia has done its part under the IMF programme and the country has performed really strongly, and now it’s time for creditors to do their part”.

China is owed around $6 billion by Zambia, whose debt stood at roughly $17 billion in June 2022. During a question-and-answer session at the University of Zambia, Georgieva explained that the IMF had “reached an understanding in principle that China will de facto accept NPV [net present value] reduction on the basis of significant stretching of the maturities and reduction of interest”.

The IMF Managing Director also informed those present that China’s shifting attitude towards debt restructuring was not specific to Zambia, but part of a larger consideration of general debt restructuring. “We have had engagements with China at the highest level and they demonstrate that China wants to act in a multilateral context,” she said.

Georgieva’s comments came one day after meeting Zambian President Hakainde Hichilema, whom she praised for his cabinet’s sustained efforts to curb wasteful expenditure.

Image via Kenya Broadcasting Corporation.