The International Monetary Fund (IMF) will release the next installment of a $1.3 billion loan if Zambia’s bilateral creditors can eventually agree on a long-delayed debt restructuring.
According to the report, an IMF delegation and Zambian authorities conducted a successful initial evaluation of the program. The second installment of the loan, equal to approximately $188 million, is contingent on the IMF Executive Board’s approval of the review.
The board will consider the assessment “after the necessary funding guarantees have been secured,” according to Allison Holland, the IMF’s Zambia Mission Director.
She argued that the requisite financial guarantees could be obtained through “an agreement with official creditors on a debt treatment that complies with programme requirements.”
Zambia, whose foreign debt reached $18.6 billion by the end of last year, became the first African government to default in the COVID-19 period in 2020 and has struggled to conclude the restructuring of this debt since then.
Despite denials from Beijing, a number of Western officials have blamed China, the largest bilateral creditor, for the delays.
In an interview, Zambian Finance Minister Situmbeko Musokotwane stated that his country was being “punished” for the delays.
The IMF commended the Zambian government for adhering to its policy commitments and achieving all of its objectives, despite lower-than-anticipated mining tax revenue.
“There has been extraordinary financial success. The government has been able to keep spending under control, and most importantly, social spending has increased in accordance with its objectives “As Holland stated.
She noted that there were risks associated with low copper prices, weather-related economic disruptions, and delays in debt restructuring.
She cautioned that further delays in debt treatment could harm Zambia’s prospects, impede the nation’s return to sustainable development, and diminish its ability to repay.
