Zambia begins crunch IMF talks on debt defaults

Lusaka - Debt-distressed Zambia began talks last week with the International Monetary Fund (IMF) for a possible bailout loan after it defaulted on two interest payments over the past three months.The Southern African copper producer hopes to navigate a debt crisis and rein in the spill-over effects of the Covid-19 pandemic as it approaches presidential and parliamentary elections due in August.Zambia - which struggled with its debt load even before the Covid-19 arrived despite its mining exports - saw its external debt bulge to nearly US$12 billion last year and became Africa's first economy to default during the pandemic.Late last year, it failed to pay US$42.5-million in interest due on a Eurobond and on January 30 it skipped a US$56.1-million payment on another bond.The virtual talks with the IMF are due to run until March 3 after president Edgar Lungu's government lodged a request for a financing arrangement.‘NOT HONEST’The exact details of the request is still unclear but treasury secretary Fredson Yamba last month said the focus will be on the need to scale up social protection programmes and support the agriculture and energy sectors.A deal could include a zero or low-interest loan to service its debts - owed largely to Chinese firms - plus technical support for economic reform.But analysts argue such a bailout will not be easy to come by if Lusaka is not transparent over the debt crisis."We have not been honest," independent financial analyst Maambo Hamaundu told AFP.Already, the country has applied for loan restructuring under the G20 debt suspension initiative for the world's poorest countries - allowing nations to focus resources on combating the coronavirus pandemic.An IMF deal, Hamaundu said, would inspire investor confidence as the package "will give [Zambia] credibility". – Nampa/AFP

Zambia begins crunch IMF talks on debt defaults

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