GLASGOW, Scotland
International Monetary Fund chief Kristalina Georgieva said on Wednesday she was “very optimistic” about reaching a lending arrangement with Zambia, one of just three countries that has sought debt restructuring under a G20 framework.
Georgieva told Reuters
on the sidelines of the COP26 UN climate conference that Zambian authorities
had done “fantastic” work in terms of debt transparency and engaging with
creditors, but more work was needed on financial assurances.
“We are not yet quite
there, but they are very determined,” she said. “So I’m very optimistic. (It’s)
not quite yet closed, but I’m optimistic that we will have a good arrangement.”
Zambia’s finance
ministry on Wednesday said it expected to resume talks with the IMF on Thursday
about an agreement mapping out economic reforms and a medium-term macro-fiscal
framework that, together with a debt restructuring package, would restore the
country’s fiscal and debt sustainability.
Zambia hopes to secure
an IMF support agreement by the end of November, but Georgieva declined to give
a timetable.
Zambia became Africa’s
first COVID-era sovereign default one year ago after years of government over
borrowing drove its debt burden above 120% of annual economic output.
An IMF agreement would
help advance Zambia’s bid to restructure its broader debt burden under the G20
Common Framework agreed with the Paris Club of official creditors. Chad and
Ethiopia are the other countries that have sought such help.
Georgieva said reaching
a deal with Zambia would allow the country’s “very determined and progressive
leadership” to address its heavy debt burden and other problems. It would also
embolden other countries that needed help to step forward and seek debt
restructuring under the framework, she said.
Zambia’s 2024 bond
gained 0.5 cents in the dollar, rising to just under 80 cents – levels last
seen in spring 2019, Tradeweb data showed.
The bonds have risen by
12 cents or more since Hakainde Hichilema secured a landslide win in the August
12 election.
Georgieva said the
Zambian process also pointed to the need to reform the Common Framework, to
ensure quicker timelines for setting up creditors committees and concluding the
process, and finding ways to incentivize countries to seek help.
Georgieva said she and
World Bank President David Malpass would continue to push the G20 economies to
offer a freeze in debt payments once a country sought help under the framework.
G20 finance ministers
failed to add the debt standstill to the framework when they met in Rome last
week, but Georgieva’s comments make clear that the issue remains on the table.
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