Zambia seeks loans bailout

Zambia is to hold detailed talks with China and other creditors as it tries to rebuild its economy. The loans re-negotiation comes as Lusaka defaulted on its foreign debts in 2020.

Zambia had, last week got a boost on its financial fortunes after securing a $1.3bn IMF bailout.

The IMF says the bailout package will help “re-establish sustainability through fiscal adjustment and debt restructuring.”

Negotiations with creditors
“This IMF loan became necessary to help us get out of the debt quagmire… We are going to go into detailed negotiations with all the creditors, including China, to reduce the level of indebtedness and resume debt servicing,” Finance Minister Situmbeko Musokotwane said.

New law to stop the recklessness 
The loan agreement includes the “passing of a new law that will make it harder for any [future] government to borrow in a reckless manner”, Dr. Musokotwane said.

“We will also spend more money on social sector including making education free and hiring more health workers and teachers,” he said.

The government will also eliminate the fuel subsidy, but retain farm subsidies.

In 2020, Zambia became the first African nation to default on repayment of its foreign debt since the coronavirus pandemic. The country was already struggling with its $12bn external debt load.

BBC/CO