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‘Not end of the road,’ IMF says Zambia still has more work to do to finalise debt restructuring


The International Monetary Fund (IMF) Resident Representative, Eric Lautier, says it is not yet the end of the road for Zambia in terms of debt restructuring as more work still needs to be done.

Zambia last week reached an agreement to restructure US$3.5 billion Eurobond debt with its bondholders.

Lautier, however, noted that the path ahead to finalise the debt restructuring, while promising, required continued diligence and cooperation.

He said this on Wednesday in Lusaka at a Public Forum on Progress made by Zambia in debt restructuring.

“Much has been achieved, but it is not the end of the road yet. The path ahead to finalize the debt restructuring, while promising, will require continued diligence and cooperation,” Lautier said.

He said the IMF staff assessed the terms of this agreement in principle with Eurobond holders to be consistent with the debt sustainability parameters under the second review of the ECF programme macro-framework.

Read more: G20 official says valuable lessons abound from Zambia’s successful debt restructuring experience

This also considered the government and their financial advisors’ strategy for all the other creditors.

“Under such a scenario, debt sustainability would be restored on a forward-looking basis, and the government would be expected to remain current on its debt obligations.

“The agreement was also deemed to be on comparable terms as defined by the official creditors, marking a major milestone under the G20 Common Framework,” Lautier said.

Zambia, he said, would need to sign bilateral agreements with all official creditors to implement the debt treatment agreed upon in the Memorandum of Understanding (MoU), which would then lead to the de facto enforcement of the agreement with official creditors.

At the same function, the World Bank Country Manager, Achim Fock, acknowledged that debt restructuring agreements were critical step for the rebuilding of trust and reduction of risk.

Fock noted that these allowed the country to service the debt while still having fiscal space to serve its most important needs to its citizens.

He, however, also raised concern at the time it took Zambia to finally restructure its debt.

“While we celebrate the results, this Common Framework is yielding here in Zambia, the process has been challenging and very slow.

“It took more than three and a half years ago from Zambia’s debt default to come to this stage and Zambia is ahead of almost all other countries. We and all stakeholders need to learn lessons from this process and improve,” Fock said.

Meanwhile, Finance and National Planning Minister, Situmbeko Musokotwane, reiterated the need for government to do away with the culture of borrowing without paying back.

“There is no space for paying and failing to pay back if Zambia is to become a respectful country,” Musokotwane said.

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