(Bloomberg) -- The outgoing World Bank chief urged international creditors to provide relief to Zambia, saying that he’s “deeply concerned” about a stalemate in restructuring about $12.8 billion of the country’s debt.
Zambia needs bilateral creditors to reach an agreement on debt treatment after restructuring options were presented by organizers of the so-called Common Framework and Paris Club in mid January, David Malpass said in a blog post. The agreement is needed for the International Monetary Fund to be able to make its second disbursement to the country, he said.
“Zambia’s government has taken many decisive actions,” Malpass said. “Now international creditors need to provide prompt debt relief to maintain the Common Framework.”
The comments contrasted with those from IMF chief Kristalina Georgieva earlier on Tuesday, who said that she saw “movement” towards a debt deal for Zambia. The nation has done everything it can to reach a restructuring agreement, she said in a virtual forum on Africa. In January, she had suggested that the disbursement could proceed on that basis even without the aforementioned deal.
“The ball is truly in the court of the creditors,” Georgieva said on Tuesday, while adding that she remains positive about the outlook for a conclusion.
Zambia for more than two years has been in talks to rework $12.8 billion of external loans from Africa’s first pandemic-era sovereign default. It’s doing so through the Common Framework, a mechanism drawn up by the Group of 20 largest economies to bring together the six-decade-old Paris Club, which represents creditors in mostly developed nations, with newer lenders including China and Saudi Arabia for the first time.
Read more: ‘Lost Decade’ Looms as US-China Face Off Over Debt Relief
China — the largest bilateral creditor country to developing countries — has blocked progress on Zambia’s debt talks with its call for loans from multilateral development banks and domestic creditors to be included in the country’s restructuring. The US and other countries have rejected such proposals.
A Global Sovereign Debt Roundtable convened by the World Bank, IMF and India as G-20 president, which held its first meeting in February, plans to meet again on April 12 during the IMF and World Bank spring meetings to look at ways to strengthen restructuring processes. The World Bank is urging clearer timelines, a debt service suspension by official and private sector creditors at the beginning of a Common Framework process, and other steps for nations in debt distress, Malpass said.
“There is urgency to act quickly, and the World Bank will do whatever it can to contribute toward a solution for these countries,” Malpass said.
--With assistance from Matthew Hill.
©2023 Bloomberg L.P.
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