UPDATE 1-IMF Chief Georgieva Says “Very Optimistic” About Lending Agreement With Zambia

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GLASGOW, Nov. 3 (Reuters) – Director of the International Monetary Fund Kristalina Georgieva on Wednesday said she was “very optimistic” about reaching a loan deal with Zambia, one of only three countries for asking for debt restructuring within the framework of the G20.

Georgieva told Reuters on the sidelines of the UN climate conference COP26 that the Zambian authorities had done a “fantastic” job in terms of debt transparency and dialogue with creditors, but that more work was needed on financial guarantees.

“We’re not quite there yet, but they are very determined,” she said. “So I am very optimistic. (It’s) not quite closed yet, but I’m optimistic we’ll have a good arrangement.

Zambia’s finance ministry said on Wednesday it plans to resume talks here with the IMF on Thursday over an agreement outlining economic reforms and a medium-term macro-fiscal framework that, along with a debt restructuring plan , restore fiscal and debt sustainability to the country. .

Zambia hopes to secure an IMF support deal by the end of November, but Georgieva declined to give a timetable.

Zambia became Africa’s first sovereign default in the COVID era a year ago, after years of government debt distress pushed its debt burden to over 120% of annual economic output.

A deal with the IMF would help advance Zambia’s attempt to restructure its broader debt burden within the common G20 framework agreed with the Paris Club of official creditors. Chad and Ethiopia are the other countries that have requested such assistance.

Georgieva said that reaching a deal with Zambia would allow the country’s “very determined and progressive leaders” to deal with its heavy debt burden and other challenges. It would also encourage other countries that need help to move forward and seek debt restructuring as part of the framework, she said.

Zambia’s 2024 bond gained 0.5 cents on the dollar, reaching just under 80 cents – levels last seen in spring 2019, according to Tradeweb data. Bonds have risen 12 cents or more since Hakainde Hichilema won a landslide victory in the August 12 election.

Georgieva said the Zambian process also highlighted the need to reform the common framework, in order to ensure faster timeframes for the establishment of creditors committees and the conclusion of the process, and to find ways to incentivize creditors. country to ask for help.

Georgieva said she and World Bank President David Malpass will continue to push G20 economies to propose a debt payment freeze once a country asks for help under this. framework.

G20 finance ministers did not add the debt status quo to the framework when they met in Rome last week, but Georgieva’s comments make it clear that the issue remains on the table.