Zambia has agreed to a $1.3 billion loan with the International Monetary Fund intended to bolster the debt-laden country’s macroeconomic stability. But the agreement’s conditions are evoking fears in Zambia and elsewhere across Africa of the debt crises of the 1980s and 1990s, and are likely to be unpopular with Zambians.
The 38-month agreement under the IMF’s Extended Credit Facility, or ECF, comes with an immediate disbursement of $185 million, with a grace period of five-and-a-half years and a final maturity of 10 years. “Zambia continues to face profound challenges reflected in high poverty levels and low growth,” Kristalina Georgieva, the managing director of the IMF, said in a statement following the decision last week by the IMF’s executive board to approve the loan. “The ECF-supported program aims to restore macroeconomic stability and foster higher, more resilient, and more inclusive growth.”
Zambia’s debt burden had long attracted international attention, and its loan agreement with the IMF comes at a time when many other countries across Africa and the rest of the Global South are faced with what some have described as a “debt pandemic.” In 2020, Zambia defaulted on the repayment of a $42.5 million eurobond repayment, becoming the first African country to default on its debt during the coronavirus pandemic. But long before that, there were considerable concerns about the country’s spending and borrowing spree, due to loan facilities taken out by the administration of former President Edgar Lungu intended for infrastructure and other needed social development programs.