MARRAKESH, Oct 13 — Zambia is close to signing a long-sought debt deal with its foreign creditors, an IMF spokesperson said yesterday after the institution’s chief prematurely announced it was signed.

Zambia reached an agreement in principle with creditors, which include China and Western nations, on US$6.3 billion (RM29.8 billion) of its debt in June but it has yet to be signed.

The managing director of the International Monetary Fund (IMF), Kristalina Georgieva, announced at the IMF-World Bank annual meetings in Marrakesh, Morocco, on Wednesday that a memorandum of understanding between Zambia and its lenders “has finally been signed”.

But an IMF spokesperson later said the agreement was “nearly finalised” and “the signing is expected soon”.

“A round of applause for Zambia,” Georgieva said after making the mistaken announcement at a panel discussion on tackling debt around the world that also featured Zambian Finance Minister Situmbeko Musokotwane.

“The creditors have been wonderful,” Musokotwane said, thanking a committee of lenders led by China, France and South Africa.

“But that by itself is not enough to provide the kind of life that these young people in Africa want to live,” he said.

“What will deliver that? Higher economic growth to create jobs so that we no longer have youth crossing the Sahara, over the Mediterranean.”

Zambia, whose total debt amounted to US$32.8 billion at the end of 2022, defaulted on its US$18.6 billion foreign debt in 2020 at the height of the Covid-19 pandemic.

Concerns over debt in low-income nations has been at the forefront of talks of the IMF-World Bank meetings in Marrakesh, the first to be held in Africa since 1973.

“Let me tell you that it is embarrassing to find yourself in debt distress,” Musokotwane said.

Central banks worldwide have raised interest rates in efforts to tame inflation, which rose after Covid restrictions were lifted and jumped higher after Russia invaded Ukraine.

Sri Lanka near deal

In a communique after talks in Marrakesh, G7 finance ministers called “for the finalisation of the MOU on the debt treatment for Zambia as quickly as possible and swift agreements on debt treatments for Ghana and Ethiopia”.

Sri Lanka has also been negotiating a debt deal with creditors at the Marrakesh meetings.

“We are on the verge of finding an agreement on the debt with Sri Lanka,” French Finance Minister Bruno Le Maire told reporters.

Sri Lanka reached a tentative agreement on restructuring its debt with China earlier this week.

The government defaulted on its US$46 billion debt last year at a time when months of food and fuel shortages were making life a misery for Sri Lanka’s 22 million people.

Zambian President Hakainde Hichilema visited China, the country’s main creditor, last month. — AFP