Zambia provides data for creditors for upcoming debt restructuring

Chicago, Nov. 16 – Zambia provided data about its existing debt and fiscal assumptions as information creditors can use regarding the sovereign’s upcoming debt restructuring in a release to the London Stock Exchange on Wednesday.

According to an October presentation, the International Monetary Fund reached staff-level agreement in December 2021 for a $1.3 billion 38-month extended credit facility that will cover 2022 to 2025. Half of the funds will be used for budget support and the remaining proceeds will be used to rebuild buffers by boosting the country’s international reserve position.

A fiscal program review is scheduled for March or April 2023.

The country has been working with an official creditor committee and commercial creditors regarding the restructuring since June. There has been regular engagement since September 2020 with eurobond holders.

The debts considered for restructuring treatment, as of October, amounted to $12.8 billion with around $4.8 billion of that coming from eurobonds, non-ECA backed commercial bank loans, other commercial lenders’ loans and loans from plurilaterals lending on commercial terms.

The restructuring proposed by Zambia ideally excludes domestic debt from the $12.8 billion restructuring.

The timetable suggested in October included a first restructuring proposal from the official creditor committee in the fourth quarter of 2022.

An agreement would ideally be reached in the first quarter of 2023 with the bondholders’ committee and then Zambia would implement the agreed-upon restructuring transaction.

The finance ministry announced on Oct. 27 that the World Bank approved $275 million in concessional financing for Zambia.

The financing was being disbursed in two tranches with $175 million immediately available.

The second tranche would be disbursed in the next three months (November to January) to allow the government time to complete key components of the reform program.

The terms include a grace period of five years and a 30-year maturity.

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