Zambia became Africa’s first pandemic-era sovereign default last month after it failed to pay a US$42.5M coupon on one of its Eurobonds.
Zambia’s presidency released a photo of President Edgar Lungu meeting with the head of the IMF’s Africa department Abebe Selassie in the capital Lusaka on Tuesday.
Zambian officials declined to give details of what was discussed during the meeting. But the IMF later confirmed that Zambian authorities had formally asked for a financing arrangement.
“The Fund is currently assessing this request,” it said in a statement.
Zambia has had a rocky relationship with the Fund under Lungu.
However, Finance Minister Bwalya Ng’andu said last month the government was in talks with the IMF over the “appropriate policy instrument” to help manage public debt and that its involvement was important to the “credibility and impetus” of the restructuring process.
Zambia’s economy was already struggling even before the coronavirus pandemic due to low prices for copper, its main export, and the IMF had classified it as in debt distress.
The government sought broad relief from its creditors and requested Eurobond holders grant it a deferral of interest payments until April.
But bondholders rejected that request, criticising the government for a lack of engagement and a failure to provide transparency, particularly on debt owed to other creditors, including China.
Zambia’s US$3B in outstanding Eurobonds is not its only debt. It owes US$3.5B in bilateral debt, US$2.1B to multilaterals and $2.9 billion to other commercial lenders.
Debt to China’s Exim Bank amounted to US$2.6B at the end of 2019, making up the lion’s share of the US$3B Lusaka owed to China and Chinese entities.
“I need to see concrete commitments from Zambia on macroeconomic policy,” Jan Dehn, head of research at Ashmore Group, told Reuters.
“I do not trust the Zambian government, so I also want to see the IMF agree with the government and define a clear and transparent adjustment program,” he said.
Ashmore is a holder of Zambian Eurobonds, according to the latest filing data for one of its funds.