By Ebi Kesiena
The Board of the International Monetary Fund (IMF) has given the green light for an immediate $187 million loan disbursement to Zambia.
This comes amidst ongoing efforts by the Southern African nation to revise a $3 billion bond restructuring proposal that was rejected by official creditors last month.
This latest payout marks the third instalment under Zambia’s $1.3 billion Extended Credit Facility arrangement, initially approved in August 2022.
Zambia, a major copper producer on the African continent, defaulted on its debts three years ago amid the challenges posed by the COVID-19 pandemic, leading to a complex and protracted restructuring process.
In November, Zambia faced a setback when its preliminary restructuring deal with bondholders was rejected by official creditors due to concerns about the comparability of debt relief offered.
Mercedes Vera Martin, the IMF’s mission chief for Zambia, revealed in a conference call that discussions on meeting the conditions for “comparability of treatment” were ongoing within Zambia’s Official Creditor Committee (OCC).
The IMF, in a document on its website, on Thursday stated that Zambian authorities are actively revising their Eurobond restructuring proposal to align with the comparability of treatment requirements outlined by official creditors. Despite substantial progress, the IMF emphasized that adjustments are still necessary to meet both program parameters and the required comparability of treatment.
The prolonged negotiations have raised concerns about the impact on Zambia’s economic recovery, especially considering the challenges posed by the pandemic and the previous default. The country’s kwacha currency has sharply depreciated against the dollar, and inflation has seen a notable rise in recent months.
However, Zambia’s government welcomed the IMF board’s approval of the loan disbursement, interpreting it as an endorsement of its ongoing reforms. The government expressed optimism that this move would instill confidence among investors as the country navigates the complexities of its debt restructuring process.