GLASGOW, Nov 3 (Reuters) – 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 overborrowing drove its debt burden above 120% of annual economic output.
Read more: IMF says Africa urgently needs vaccines to halt repeated COVID waves
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.
(Reporting by Andrea Shalal, additional reporting by Karin Strohecker; Graphic by Marc Jones; editing by Karin Strohecker and Toby Chopra)
