(MENAFN) During an annual meeting of the IMF and the World Bank in Marrakesh, Morocco, Zambia's finance ministry announced that they have successfully reached a much-anticipated agreement regarding their foreign debt. This agreement is expected to offer a significant financial respite to Zambia, which, in 2020, became the first African nation to default on its debt due to the economic repercussions of the COVID-19 pandemic.
"The Ministry of Finance...is pleased to announce that a Memorandum of Understanding (MoU) has been agreed with its Official Creditor Committee (OCC) on the comprehensive debt treatment," the ministry stated. "Each official creditor will now begin their internal process to sign the MoU."
In June, Zambia had initially reached a preliminary agreement with its creditors, encompassing both China and Western nations, regarding a substantial portion of its USD6.3 billion debts. However, at that time, the agreement had not been officially concluded.
Earlier this week, the International Monetary Fund (IMF) indicated that the finalization of the deal was imminent, following an early announcement by the IMF's chief that erroneously suggested that the agreement had already been signed.
"The next step is to secure a comparable agreement with our private creditors," As stated by Zambia's Finance Minister, Situmbeko Musokotwane. "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". Worries regarding debt challenges in low-income countries have taken center stage in the discussions at the IMF-World Bank meetings in Marrakesh. Notably, this event marks the first time these meetings have been held in Africa since 1973.
Global central banks have taken measures to increase interest rates with the aim of curbing inflation, which surged following the lifting of COVID-19 restrictions and spiked even higher in the wake of Russia's invasion of Ukraine.
Zambia, with a total debt load reaching USD32.8 billion by the conclusion of 2022, experienced a default on its USD18.6 billion foreign debts back in 2020, during the peak of the COVID-19 pandemic.
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