The International Monetary Fund is withholding a $188 million payment to Zambia to push the nation’s official creditors to agree to a long-awaited debt relief deal, but the Washington-based lender won’t fail the southern African nation, Managing Director Kristalina Georgieva said.
(Bloomberg) — The International Monetary Fund is withholding a $188 million payment to Zambia to push the nation’s official creditors to agree to a long-awaited debt relief deal, but the Washington-based lender won’t fail the southern African nation, Managing Director Kristalina Georgieva said.
Zambia has been trying since 2020 to restructure external loans that last year grew to $18.8 billion, and the slow progress in reaching an agreement is imperiling its economy. The nation needs creditors to sign a memorandum of understanding to provide relief before the IMF’s board can approve the payment, it said last month.
“We want us to be a pressure point for resolution. We don’t want to rush and say here is the $188 million, never-mind that there is no agreement,” Georgieva told reporters Wednesday in Nairobi, the capital of Kenya. “This being said, Zambia met all conditions for this disbursement and we are not going to let Zambia down.”
The copper-producing nation is emerging as a test case for the Group of 20’s Common Framework to revamp low-income countries’ unaffordable debts, and could set important precedents for how major new creditors like China coordinate relief with traditional Paris Club lenders, and private bondholders in Europe and the US. Countries including Ghana, which is at a much earlier stage of the same process, are watching closely.
China has faced repeated blame for delaying a deal, while its leaders have in turn blamed multilateral lenders for holding up the process by not providing enough relief themselves. It’s in both China’s and Zambia’s interest to resolve the restructuring as soon as possible, Du Xiaohui, Beijing’s ambassador to Lusaka, said Thursday.
Zambian President Hakainde Hichilema plans to meet French President Emmanuel Macron May 10 in his effort to finalize the restructuring.
While a deal for Zambia has been frustratingly elusive, Georgieva said she expects the fund to be able to make the $188 million payment “very soon.” The nation’s official creditors committee that China and France co-chair is scheduled to meet again next week, she said.
“The signals are they are moving,” Georgieva said. “The Chinese premier confirmed that China is committed to debt resolution for Zambia.”
–With assistance from Taonga Mitimingi.
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