Zambia is seeking $8.4 billion in debt relief through 2025, according to a report by the International Monetary Fund, as the distressed country heads into tough negotiations with official creditors, expected to last through December.
Zambia owes China nearly $6 billion out of nearly $17 billion in total external debt, while its total debt is nearly double that, IMF data showed. Its overall commitments are well above the southern African nation’s GDP, which reached $21 billion last year.
“We expect debt relief now will be sufficient to meet the debt sustainability goals that we outlined,” an IMF official said on Wednesday, adding that the fund wants a deal that ensures “debt servicing does not exceed 14% of revenue.”
Zambia hails IMF debt deal as it promises a sustainable path ahead
Zambia marks a "happy" moment, as it reaches a $1.3 billion bailout deal with IMF, as it hopes to recover from years of mismanagement and begin a sustainable path forward.
Why it matters: The negotiations will be a litmus test for how Beijing handles borrowers in crisis. Also on the line is the viability of the G-20 Common Framework, the only global system for debt relief, enacted in 2020.
Zambia is the only country to reach a deal under the G-20 framework. Speaking this week in Brussels, IMF chief Kristalina Georgieva said the global debt system faces a “struggle.”
Problems delayed: Campaigners like Tim Jones, senior policy and campaigns officer at Debt Justice, worry the problems are just being kicked down the road, unless there is debt cancellation from creditors such as BlackRock, which will start talks with Zambia after the official creditor negotiations.
“There is a huge risk that what happens in the negotiations is that those debt payments just move into the 2030s, creating another debt crisis then,” Jones told Devex. “We are calling on private and government lenders — including China and the UK — to cancel debt, not just push it into the future.”
More needed: The IMF assessment acknowledges that “some additional cash debt relief” might be needed after 2026, so Zambia can bring its debt-servicing payments down to manageable levels relative to revenues. The fund is also pushing Zambia to hit a 3.2% budget surplus, which will require strict austerity.
About the author
Shabtai Gold
Shabtai Gold is a Senior Reporter based in Washington. He covers multilateral development banks, with a focus on the World Bank, along with trends in development finance. Prior to Devex, he worked for the German Press Agency, dpa, for more than a decade, with stints in Africa, Europe, and the Middle East, before relocating to Washington to cover politics and business.
