Zambia has agreed a Memorandum of Understanding (MoU) with its Official Creditor Committee (OCC) on the comprehensive debt treatment agreed in June 2023. This is a significant milestone in Zambia’s efforts to achieve long-term debt sustainability.
The MoU formalizes the agreement reached in June with official creditors and represents an important step forward. Each official creditor will now begin their internal process to sign the MoU. Following the signing of the MoU, the terms will be implemented through bilateral agreements with each member of the OCC.
Zambia’s Minister of Finance and National Planning, Dr. Situmbeko Musokotwane, said: “We are grateful to all our official creditors, especially the co-chairs of the committee, China and France, and vice-chair South Africa, for their commitment to help resolve Zambia’s debt overhang. We are also thankful to our multilateral partners, the International Monetary Fund, the World Bank and the African Development Bank, for their continuous support and substantial financial contribution to our development agenda.”
“The next step is to secure a comparable agreement with our private creditors,” Musokotwane added. “Our government committed to resolve the mounting debt suffocating our economy and we are proud of the immense progress we have made. Once completed, debt restructuring will free up resources vital for this government to invest in our development agenda: first generation reforms, investment in human capital and job generation to reinvigorate our economy and create opportunities for the Zambian people.”
The agreement with official creditors is a major step forward for Zambia, but it is important to note that the country still needs to reach a comparable agreement with its private creditors. This is a complex process that could take some time, but it is essential for Zambia to achieve long-term debt sustainability.
Once debt restructuring is completed, Zambia will be able to free up resources to invest in its development agenda. This will help to reinvigorate the economy and create opportunities for the Zambian people.