Zambia reached a milestone as it announced a long-awaited debt restructuring deal worth $6.3 billion, including its loans from China, its largest private creditor.
Being the first African nation to default on its debt during the pandemic, this agreement is seen as a positive sign for other developing countries facing debt distress.
The news was met with great enthusiasm as Zambian lawmakers set aside their political affiliations and joyfully sang the national anthem during a parliamentary session. National Assembly Speaker Nelly Mutti commended the unity displayed by the lawmakers and even joked about the opposition leader joining in the celebration.
Zambians across the country, including online platforms, joined in the jubilation. Defense Minister Ambrose Lufuma applauded the debt restructuring deal, attributing it to President Hakainde Hichilema’s leadership and vision.
President Hichilema himself expressed gratitude on Twitter, describing the deal as a significant milestone towards economic recovery and growth.
According to Secretary to the Treasury Felix Nkulukusa, the agreement entails official creditors providing a debt restructuring plan based on Zambia’s debt-carrying capacity at the end of the fund-supported program. The terms of the agreement will be formalized in a memorandum of understanding between Zambia and its official creditors.
The International Monetary Fund (IMF) Managing Director Kristalina Georgieva congratulated Zambia on the deal, and as a result of the successful debt restructuring, Zambia will receive an additional $188 million tranche from the IMF.
Economist Trevor Simumba described the agreement as a game changer for Zambia, signaling strong international support. However, he emphasized that substantial work lies ahead to address the outstanding $6.8 billion owed to private creditors.
With Zambia owing China over $6 billion and other bondholders $3.5 billion, the total external debt as of the end of 2022 stands at an estimated $18.6 billion, according to government data.