Zambia and France Sign Landmark Debt Restructuring Agreement

In a crucial effort to alleviate Zambia’s debt challenges, the government has signed a bilateral debt restructuring agreement with France, marking a vital landmark in the country’s economic recovery journey. The deal, concluded by Finance Minister Dr. Situmbeko Musokotwane and French representative William Roos, builds upon the recommendations of the October 2023 Memorandum of Understanding (MoU) under the G20-Paris Club Common Framework for Debt Treatment.

The bilateral agreement is the first to be finalised under the MoU. It aims to pave the way for an additional 15 agreements with other creditor countries, providing comprehensive debt treatment for Zambia. These measures are expected to ease Zambia’s economic difficulties while aiding economic recovery, social investments, and sustainable development initiatives.

Dr. Musokotwane expressed gratitude to the French government, the G20, and the Paris Club for their commitment to addressing Zambia’s financial difficulties. He stated that “this agreement is a testament to the power of international cooperation in tackling the debt sustainability challenges faced by developing nations”. He also highlighted President Hakainde Hichilema's discussions with French President Emmanuel Macron as instrumental in reaching this agreement.

Under the terms of the deal, the date by which Zambia needs to pay back its debts is pushed back by an average of 12 years beyond 2040. Interest rates will be fixed at 1% for the next 14 years and won’t exceed 2.5% after that. This takes a lot of pressure off the government’s finances and frees up more money to be spent on schools, hospitals, roads, and CDF.

Under former President Edgar Lungu, Zambia’s foreign debt obligations ballooned to more than $17 billion and the country became the first African nation to default on its debts in the COVID-19 pandemic era. By 2021, 38% of the national budget was being spent on servicing this debt.

French representative William Roos reiterated France’s support for Zambia, stressing the significance of mutual trust and collaboration in achieving equitable financial outcomes. Roos noted that Zambia is the first country to implement debt restructuring under the MoU, indicating a positive step towards economic partnerships.

This agreement not only reduces Zambia’s financial stress but also highlights the importance of global unity in addressing the debt sustainability challenges faced by developing nations.