(Reuters)

Zambia’s creditors pledged to negotiate a restructuring of the country’s debts on Saturday, a move IMF managing director Kristalina Georgieva welcomed as “clearing the way” for a $1.4 billion Fund programme.

The creditor committee, co-chaired by China and France, said in a statement released by G20 chair Indonesia that it supported Zambia’s “envisaged IMF upper credit tranche program and its swift adoption by the IMF Executive Board”.

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

“Very pleased the Official Creditor Committee for Zambia has provided its financial assurances clearing the way for a Fund program,” IMF managing director Kristalina Georgieva said in a tweet.

“The delivery of these financing assurances will enable the IMF Executive Board to consider approval of a Fund-supported program for Zambia and unlock much needed financing from Zambia’s development partners,” Georgieva said in a statement released by the IMF after her tweet.

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

Zambia’s government welcomed the creditors’ pledge and its unlocking of IMF support.

“Zambia remains committed to implementing the much needed economic reforms, being transparent about our debt and ensuring fair and equitable treatment of our creditors,” finance minister Situmbeko Musokotwane said.

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