IMF asks Zambia to redraft economic policy in return for funding

Zambia must redraft economic policy to make its public debt more sustainable, the International Monetary Fund said on Wednesday, December 9, after the copper-rich country requested IMF funding for reforms.

Zambia, which has seen its external debt surge to nearly $12 billion this year, had made a formal request to the IMF on Tuesday, December 8. 

But wrapping up a visit to Lusaka, the director of IMF Africa’s Department, Abebe Aemro Selassie, said that “given the deep-rooted challenges faced, policies would need to be calibrated to restore sustainability while protecting the vulnerable and creating more inclusive growth.”

The IMF said it would assess options to support Zambia’s reform efforts over the coming weeks.

Selassie held talks with President Edgar Lungu, Finance Minister Bwalya Ngandu, and central bank chief Christopher Mvunga.

In September, the Zambian government requested a 6-month deferral on interest payments for 3 commercial eurobonds worth $3 billion.

But it missed the $42.5-million interest payment due on one bond on October 14, prompting ratings agency S&P to declare the country in default.

A month later, a grace period ended for payment on a $750-million eurobond due to expire in 2022.

Failure to honor its obligations could see it officially declared in default, becoming Africa’s first economy to default during the coronavirus pandemic. – Rappler.com