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G20 chair says Zambia’s creditors commit to negotiate restructuring terms

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JAKARTA — Zambia’s creditors committed to negotiating a restructuring of the country’s debts and expressed support for the “swift adoption” of a proposed $1.4 billion IMF program, G20 chair Indonesia said on Saturday.

The creditor committee, co-chaired by China and France, said in a statement released by Indonesia that the restructuring terms would be finalized in a memorandum of understanding and that it “supports Zambia’s envisaged IMF upper credit tranche (UCT) program.”

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In 2020, Zambia became the first African country in the pandemic era to default. The restructuring of its external debts, which amounted to more than $17 billion at the end of 2021, is seen by many analysts as a test case.

The creditor committee statement was expected to be sufficient for the IMF to agree to release the $1.4 billion at a September board meeting, sources familiar with the situation told Reuters last week, with the debt relief details to be agreed in future creditor meetings.

Zambia reached a staff-level agreement with the IMF on the $1.4 billion three year extended credit facility in December, conditional upon its ability to reduce debt to levels the Fund deems sustainable.

Its creditor committee also called on private creditors to “commit without delay” to negotiating debt relief on terms at least as favorable as the ones it is considering.

Zambia’s government and the IMF did not immediately respond to requests for comment.

On Friday, Zambia’s finance ministry said it was canceling $2 billion in undisbursed loans.

The first creditor meeting was held in June, after Zambia’s government complained of delays to the restructuring, which is taking place under the Common Framework, a debt relief process launched by the Group of 20 major economies in 2020 that has been criticized for being slow to yield results. (Reporting by Gayatri Suroyo and Rachel Savage in London; Editing by Stephen Coates and Christina Fincher)

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