Zambia has reached a pivotal agreement to restructure over $3.5 billion of its international bonds with private investors, marking a significant milestone in its efforts to address its debt obligations. As part of the deal, creditors will waive $840 million in claims, while Zambia commits to maintaining its ongoing $2.5 billion IMF cash flow relief program.
The agreement comes after months of negotiations marked by tensions between China and other creditors over the proposed terms. Zambia had incurred substantial borrowing, particularly in response to the economic challenges posed by the Covid-19 pandemic.
This development signifies progress following a series of delays, positioning Zambia at the forefront of initiatives aimed at resolving debt crises in low-income countries.
The G20 Common Framework, launched in 2020 to address the debt burdens of vulnerable nations, faced criticism amid Zambia’s prolonged negotiations. However, the successful implementation of the restructuring agreement positions Zambia as the first country to achieve debt restructuring under this framework, signaling hope for other nations facing similar challenges.
