Zambia’s official creditors are expected to provide it with financial guarantees by the end of July, paving the way for the first debt restructuring under the G20 framework set up at the height of the COVID-19 pandemic, two sources familiar with the matter said.
Zambia would be the first of three countries to request debt relief under a joint framework agreed by the Group of 20 major economies and the Paris Club of official creditors to move forward in the very slow process.
Creditor committees in Zambia, Chad and Ethiopia are meeting this month as pressure mounts to speed up the debt restructuring process.
An exact date for the meeting of Zambia’s creditors’ committee has yet to be set, but sources briefed on the matter said they expected the African country to secure financial assurances by the end of the month and said private sector creditors were cooperating.
Russia’s war in Ukraine has sent food and energy prices soaring, exacerbating debt problems that already affect 60% of low-income countries and threaten a growing number of middle-income countries.
The Common Framework was created in October 2020 to contain another major debt crisis, but progress has been slowed by the reluctance of China — now the world’s largest sovereign creditor — and private sector lenders to participate, which has discouraged other countries from seeking debt. relief.
Experts say the move on Zambia could help attract interest from heavily indebted countries, especially given the growing risk of a global recession, higher interest rates and continued capital outflows from emerging market economies.
Developing a common framework will be a key topic at next week’s meeting of G20 finance officials in Indonesia, but Zambia’s case is unlikely to be resolved before the meeting, the sources said.
IMF and World Bank officials have been blunt about the flaws of the Common Framework. They are calling for financial officials from major G20 economies to put more pressure on China and private sector lenders to participate.
Zambian Finance Minister Situmbeko Musokotwane said last week that the country’s economy would be severely compromised without external support.
A Paris Club source said earlier this week that the group of rich creditor nations is working to provide the IMF with financing guarantees that could free up funds for Zambia.
“We hope this can happen before the end of July,” the source added.
Zambia’s creditors are expected to provide financial guarantees by the end of July – SABC News
Source link Zambia’s creditors are expected to provide financial guarantees by the end of July – SABC News