In a bid to overcome financial hurdles, Zambia is on the verge of signing a memorandum of understanding to restructure its hefty $6.3 billion debt. The agreement is expected to be finalized during the IMF’s annual summit next week, according to information released on Wednesday.
The southern African nation has been locked in protracted creditor negotiations since June. These discussions have led to an initial agreement with a consortium spearheaded by China and France. The terms of this preliminary pact demand that Zambia decrease interest rates to an unprecedented 1%, delay loan repayments until 2043, and aim for a substantial 40% reduction in the net-present value of its debt.
This move comes as Zambia grapples with daunting economic challenges. The proposed restructuring plan offers a potential path forward, providing the country with some breathing room by pushing back repayment dates and significantly reducing the burden of its debt.
The upcoming IMF summit will be crucial in determining whether this ambitious plan can be executed successfully. As part of the agreement, Zambia is required to lower interest rates drastically and reduce the value of its debt, measures that could significantly ease its financial burden if approved.
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