Zambia said it reached a long-awaited deal to restructure $6.3 billion of its debt, including its loans from China, its largest private creditor.
Zambia was the first African country to default on its debt during the coronavirus pandemic and analysts say the deal paves the way for developing countries in debt distress.
Zambian lawmakers Friday hailed the deal. They were in a jovial mood as they sang the national anthem during a parliamentary session, setting aside their political affiliation to celebrate the agreement.
National Assembly Speaker Nelly Mutti congratulated lawmakers in parliament for singing the national anthem with vigor and strength. She joked that even the leader of the opposition joined in the jubilation.
Zambians across the country, including online, joined in the celebration.
Zambia Defense Minister Ambrose Lufuma welcomed the debt restructuring deal when he addressed lawmakers in parliament Friday and congratulated President Hakainde Hichilema.
“It is a done deal,” Lufuma said. “We have fortunately a visionary leader, a leader of commitment, a leader of love, who went through a lot of hardships.”
Hichilema said on Twitter Thursday that the deal is a major milestone in the country’s journey toward economic recovery and growth.
In a statement released in Lusaka Thursday, Secretary to the Treasury Felix Nkulukusa said under the agreement, the official creditors will provide a debt restructuring plan on Zambia’s debt-carrying capacity at the end of the fund-supported program.
Nkulukusa said the terms of the agreement will be described and formalized in a memorandum of understanding between Zambia and its official creditors.
International Monetary Fund Managing Director Kristalina Georgieva, in a statement Thursday, congratulated Zambia on the deal.
Having successfully restructured its debt means Zambia will be able to receive another $188 million tranche of money from the IMF.
Trevor Simumba, a senior economist with the Economic Association of Zambia, told VOA Friday that the agreement is a game changer for Zambia.
Simumba said now the hard work starts to get the $6.8 billion that is still outstanding with private creditors.
“It signifies a significant step. It signifies that the international community is 100% behind Zambia, and I think it’s very good news for Zambia,” Simumba said. “What is important now is to understand that there’s going to be a lot of work now that has to go into the nitty gritty of the deal.”
The Ministry of Finance says Zambia owes China more than $6 billion, while other bond holders are owed $3.5 billion.
Government data indicates Zambia’s total external debt as of the end of 2022 is estimated at $18.6 billion.