International Monetary Fund Managing Director Kristalina Georgieva on Monday said she hoped debt restructuring efforts for Zambia and Chad could be completed by the end of the year, which would pave the way for more countries to seek help.
Georgieva, speaking with civil society groups at the start of the annual IMF and World Bank meetings, said a Group of 20 initiative launched in late 2020 had been slow to become operational, but she was upbeat about the cases of Chad and Zambia, who together with Ethiopia were the first to request help.
Georgieva said the IMF was pressing for more predictability and timely resolution of requests for help under the G20 Common Framework. It was also critical to expand the framework to include middle-income countries, she said.
The IMF was also working on how to include collective action clauses in debt contracts being signed today that would allow immediate suspension of debt service payments if a country experienced a climate shock, she said.
IMF and World Bank officials have repeatedly singled out China, the biggest creditor to many African countries, and private sector creditors for dragging their feet on reducing countries’ debt burdens.
The Zambian government on Friday told investors it hoped it would agree debt relief terms with official creditors by the end of the year or early 2023.
Zambia was the first African country to default during the COVID-19 era as it struggled with debt that reached 133% of GDP at the end of 2021. The IMF estimates that Zambia needs $8.4 billion of “cash debt relief” – cutting both interest payments and loan repayments – from 2022 to 2025.
The fund in late August approved a $1.3 billion, three-year loan to Zambia, a crucial step in the southern African country’s quest to restructure its debts.
Chad’s creditors are close to reaching a debt relief agreement, a French Finance Ministry source said on Monday.
