IMF staff agree second review of Zambia facility, unlocking $184m

…but Hichilema’s decision to align Zambia with the US has backfired. The debt restructuring deadlock, with bondholders losing the upper hand, is enough proof that it’s China’s debt world.

Lusaka, Nov 22 – The International Monetary Fund has reached a staff-level agreement with Zambia on the second review of its Extended Credit Facility, unlocking another $184 million upon IMF board approval, the Fund said on Monday.

Also Read: We don’t have a capable leader to mobilise national wealth.

“It would be a waste of time to get the debt restructuring without creating the necessary production capacity in the country to repay the debts when the repayments are due!” – Nawakwi

The IMF’s mission chief for Zambia added in a statement that the Fund welcomed Zambia’s memorandum of understanding with its official creditors and ongoing discussions with private creditors to reach an agreement on debt restructuring.

She said Zambia may need to further tighten monetary policy to contain inflationary pressures and that building reserves would enhance the southern African country’s external resilience.

Earlier on Monday, Zambia suffered a major setback in its debt restructuring efforts after the government said a revised deal to rework $3 billion of Eurobonds could not be implemented at this time due to objections from official creditors, including China.

An impasse between creditor nations and private bondholders is evidence of the difficulty of revamping the debt restructuring mechanism in an era when China has displaced traditional rich-country lenders.

Zambia’s dollar bonds and currency plummeted on Monday after official creditors vetoed a revised deal between the government and private investors to restructure $3 billion of debt. The rejection drew an acrimonious rebuke from the external bondholder steering committee, which said the position taken by the official creditors was “extraordinary” and would have “significant adverse consequences, most immediately for Zambia.” Zambia stood to gain significant cash flow and debt relief from the agreement, it said.

The deadlock, with bondholders losing the upper hand, is enough proof that it’s China’s debt world and yet President Hakainde Hichilema does not seem to understand the current geopolitical landscape!

Also Read: This is a wrong time to align Zambia with the US with a changing geopolitical landscape.

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