According to Zambia’s Finance Ministry, the country is expected to make its first debt restructuring proposal to creditors by the end of the year, with the goal of having a memorandum of understanding completed by 1Q23.
Zambia is seeking debt treatment on US$12.8bn of its liabilities, representing 64 percent of its external debt stock. Note that Zambia’s IMF programme parameters warrant an external debt present-value reduction of US$6.3bn, or 49 percent of the external debt, to meet the targets set out by the lender by 2027. The discount rate that is expected to be used to calculate the NPV of the debt relief is likely to start at 5 percent but, with negotiations, may decline from there.
