Zambia’s finance ministry said on Thursday it had reached an agreement in principle on debt restructuring terms with a creditor group holding its international bonds, a milestone in its drawn-out debt rework process.
The agreement will see the three existing bonds restructured into two new amortising bonds maturing in 2035 and 2053 respectively, with the 2035 note will pay out more interest sooner if Zambia’s economy performs better. The deal would translate into an 18% nominal haircut, the ministry said.
The proposed restructuring includes a $700 million write-off and $2.5 billion in cash flow relief during the period of Zambia’s $1.3 billion, 38 month IMF programme, which was approved in September 2022.
Zambia was the first African country to default in the COVID-19 era, in late 2020, and its restructuring process suffered numerous delays. International bondholders also complained they were left out of the process, which started with drawn-out negotiations with bilateral creditors including China.
The agreement “paves the way for similar restructuring agreements with our other private creditors,” Zambia’s finance minister Situmbeko Musokotwane said in a separate statement.
“We hope for the swift implementation of this agreement in principle by the end of the year.”
