Secretary of the Treasury Janet Yellen welcomed the consensus reached by official bilateral creditors regarding debt relief for Zambia.
According to the U.S. Department of the Treasury, Yellen applauded the international community for coming together to address Zambia's urgent needs.
"I welcome the consensus that official bilateral creditors have reached on providing a debt treatment to Zambia,” Yellen said, according to the Treasury's website. “Debt relief for Zambia has been a priority for me, and I am pleased the international community has come together in Zambia's time of need.”
The agreement provides a debt treatment plan for the country and marks a significant milestone in Zambia's efforts to strengthen its economy and improve the quality of life for its citizens, bringing hope for economic stability and opportunity.
The Minister of Finance and National Planning, Dr. Situmbeko Musokotwane, also acknowledged the significance of the agreement.
"We are grateful for the support from our official creditors in resolving Zambia's debt overhang that has been choking our economy,” Musokotwane said, according to his website. “This agreement marks a crucial milestone in Zambia's ongoing efforts to strengthen its economy and improve the quality of life for its citizens. We will now work to achieve a swift resolution with our private creditors and deliver opportunity and economic stability to the Zambian people."
Under the agreed terms, Zambia and official creditors will implement a debt treatment plan based on Zambia’s debt-carrying capacity at the end of the fund-supported program. This will be assessed under the IMF and World Bank Debt Sustainability Framework for Low-Income Countries and will be adjusted if conditions improve enough to justify an upgrade from “weak” to “medium” debt-carrying capacity, in which case principal reimbursements would be accelerated and interest payments increased.
Local currency debt is excluded. The details will be outlined in a Memorandum of Understanding, and implementation will be through bilateral agreements. The agreement is expected to enable IMF financing of $188 million and aid negotiations with private creditors to resolve the debt overhang.
Kristalina Georgieva, managing director of the International Monetary Fund, also praised the agreement.
"This unique and innovative agreement specifies both a baseline and a contingent treatment that would be automatically triggered if the assessment of Zambia's economic performance and policies improves," Georgieva said, according to the IMF website.
Debt relief has been a top priority for Yellen, “something I have pushed for urgently both in public and in private with creditors.” She is pleased that the international community is supporting Zambia. “I urge all official bilateral and private-sector creditors to quickly finalize the debt restructuring process that will provide relief to Zambian families and encourage the private investment that is needed to jump-start the economy."