Zambia is asking its external creditors to provide debt relief amounting to $8.4 billion for the period 2022-25.
Zambia, which defaulted in 2020, is currently in talks with its foreign-currency creditors, including Chinese lenders and Eurobond holders, on a restructuring that seeks to bring its debts back to a level the IMF considers sustainable.
The IMF offered the $1.3 billion bailout after bilateral creditors, including Chinese lenders, agreed in principle to debt relief. But Zambia must now negotiate the details of how to restructure those loans, which include $3 billion of dollar eurobonds.
The IMF says Zambia must cut down the amount that it spends on servicing debts from nearly two-thirds of revenues to about 14% in 2025, and it should maintain this ratio for most of the next decade.
Under the terms of the bailout, the IMF expects the country to limit new external loans to those from concessional creditors, such as multilateral lenders, over the next few years.
The government has also agreed to eliminate fuel subsidies and to cut agricultural subsidies, pledging to protect social spending.
With Lusaka owing about $6 billion of its $17 billion in external debt to Chinese lenders, China is its biggest creditor.
Zambia’s overall public debt stood at 126% of GDP last year and is expected to decline to 104.7% by the end of 2025.