Zambia reached a staff-level agreement with the IMF last December on a $1.4 billion ECF arrangement. Before the agreement is fully validated, IMF requires the country to show better debt management performances.

Meanwhile, the Zambian government expects the deal to be finalized by the end of H1 2022. “We are well on the way of solving this issue of unsustainable debt. We expect full agreement with the IMF sometime in the middle of 2022,” finance minister Situmbeko Musokotwane (pictured) said during a meeting with bankers. 

The deal is expected to last until 2025, It was first negotiated under former president Edgar Lungu. As a reminder, Zambia had defaulted on the repayment of three Eurobonds at the end of 2020 and had then asked its investors for a new grace period to start repaying its external debt. However, Lusaka's creditors had conditioned the acceptance of this request to the conclusion of an agreement with the IMF.

The new agreement being negotiated will aim to restore fiscal and debt sustainability, create fiscal space for much-needed social spending and strengthen economic governance and transparency. In a December 6 statement, the IMF said the final agreement would be conditional on Lusaka's efforts to stabilize its public debt.

“We welcome the authorities' request for debt treatment under the G20 common framework and hope that official creditors can quickly form a committee and provide financing guarantees. We support the authorities' efforts to maintain constructive engagement with private creditors to help secure an agreement on terms comparable to those of official creditors," IMF said, adding that “sufficient progress will be needed before the staff-level agreement is presented to the IMF Board for approval.”

Moutiou Adjibi Nourou