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Zambia, which signed a preliminary agreement in June to restructure part of its debt, is close to concluding a memorandum of understanding with its creditors but it is not yet fully finalized, an IMF spokesman said on Thursday.
“An agreement on the memorandum of understanding is almost finalized and signing is expected soon. “, said this spokesman for the institution, whose Managing Director Kristalina Georgieva had previously prematurely announced a signature.
The agreement “has finally been signed”, Mrs. Georgieva had welcomed earlier at a round table discussion on the occasion of the annual meetings of the International Monetary Fund (IMF) and the World Bank, which are being held until Sunday in Marrakech (Morocco).
A source close to the matter confirmed to AFP that the agreement had not yet been finalized, with the signature expected next week.
In the communiqué concluding their discussions in Marrakech on Thursday, the G7 finance ministers called for “the finalization of the memorandum of understanding on the restructuring of Zambia’s debt as quickly as possible”.
This will be the final step in validating the agreement in principle signed in June to restructure $6.3 billion of external debt, one of the conditions set out by the IMF in the agreement detailing its aid program with Zambia, in order to release all disbursements.
“All our creditors have been wonderful, thank you all for giving us this opportunity”, said Zambian Finance Minister Situmbeko Musokotwane, who recalled, “how embarrassing it is to find yourself in a debt crisis situation”.
Such an agreement “is not enough, however, to offer the kind of life that young Africans want to live,” he added, believing that it was now necessary to bring about “better growth that creates jobs so that we no longer have young people trying to cross the Sahara and the Mediterranean”.
Zambia’s debt, which has exploded in recent years, is estimated at $32.8 billion, of which $18.6 billion is owed to foreign creditors such as China, its main lender.
Zambia was the first African country to default on its debt in 2020, following the outbreak of the Covid-19 pandemic.
Zambia’s ex-president Edgar Lungu is accused of having undertaken major infrastructure projects and of having over-indebted the country to China ($4.1 billion), which is building airports, roads, schools, factories, and even police stations in the country.
“If you combine what we spend on salaries for our public servants and the servicing of this debt, it represents over 90% of the taxes collected. Now that we’ve got help, we can concentrate the money on the most vulnerable,” added Mr. Musokotwane.
Zambia had reached an agreement with the IMF for a $1.3 billion aid program in August 2022, and successfully passed the first review, which enables the IMF to ensure that the reforms set out in the program are being implemented, carried out last July.