The IMF never stops playing firefighters, especially in Africa. The International Monetary Fund (IMF) said it on Saturday agreed to release $1.3 billion in loans to Zambia, whose debt has just been repaid after an agreement with the country’s creditors, including France and China and members of the G20, were restructured.
In a press release, creditor countries and private lenders agreed to review their requirements on Zambia’s debt in exchange for Lusaka’s commitment to implement economic reforms. The South African country has already defaulted on its $17 billion worth of debt in 2020 during the pandemic. The release of an amount of 1.3 billion from the IMF over three years, validated in December 2021, has been suspended due to a Zambian debt restructuring.
On Saturday, IMF Managing Director Kristalina Georgieva welcomed Zambia’s “assurances” of a debt bailout and confirmed that the board would confirm the disbursement of funds.
“This support for the G20 Common Framework shows that international partners are coming together to help countries solve their debt problems, sending a strong signal to other countries trying to restore debt sustainability, achieve sustainable growth and reduce poverty ‘ she emphasized.
The IMF makes loans faster and easier than ever before
For its part, the Zambian government, through the voice of its finance minister, says it is committed to “implementing much-needed reforms, making its debt transparent and ensuring fair and equitable treatment of its creditors”.
The combination of the pandemic, inflation and commodity tensions has weakened the public finances of many nations, particularly in Africa, where the IMF has continued to intervene in recent weeks, from Tunisia to Ghana to Egypt and now Zambia.
In this chaotic environment, the fund is making more and more loans to about half of its 190 members. The fund, which has been heavily criticized for the fallout from the austerity measures previously imposed, has eased its lending criteria, which place fewer and fewer demands on the requested counterparties, particularly with regard to reforms. Above all, the IMF faces new competition from the massive loans that China is developing for poor countries. And wants to remain the first lender of last resort.
The IMF is making a comeback under pressure from China