Mirage of Progress

Zambia: IMF plays for time as it seeks to pacify creditors

By David Whitehouse

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Posted on May 20, 2021 09:30

The IMF’s statement that progress has been achieved in talks with Zambia in the wake of its 2020 eurobond default masks the fund’s real aim of preventing creditors from pursuing international arbitration.

On 10 May, the IMF said it had reached “broad agreement” on the macroeconomic framework needed for Zambia’s request for an Extended Credit Facility (ECF). Zambia’s ministry of finance added that “significant progress” had been made and that talks would continue at “the appropriate time”.

The real progress that has been made is “rather limited”, says Caesar Cheelo, associate executive director at the Southern African Institute for Policy and Research in Lusaka. The IMF talks are essentially a sop to creditors who want to resort to international arbitration and have Zambia declared insolvent in the wake of the default on eurobond debt in November 2020, Cheelo says.

  • “The IMF stepped in and dissuaded the creditors from that planned course of action, citing risks to the multilateral financial system.”

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