IMF to assess plan for indebted Zambia in coming weeks

LONDON: The International Monetary Fund said on Wednesday that it will assess a possible support programme for debt-strained Zambia in the coming weeks.

The Zambian government announced on Tuesday it had formally requested IMF support after the country became Africa's first pandemic-era sovereign default last month when it failed to make a payment on one of its bonds..

"(We) will be assessing in the coming weeks how the IMF could support the authorities' reform efforts through a possible Fund program," Abebe Aemro Selassie, Director of the IMF's African Department said in a statement.

Although Zambia is a major copper producer, the southern African country's debt-to-GDP ratio is nearly 140%.

Selassie said after a visit to Zambia that deep-rooted challenges meant the government's policies would need to be calibrated to restore sustainability while protecting the vulnerable and creating more inclusive growth.

"Authorities reiterated their intention of restoring the credibility of the budget, increasing debt transparency, strengthening public financial management, as well as improving governance and preserving financial stability," he added.

Kevin Daly, an emerging markets portfolio manager at Aberdeen Standard Investments, a member of Zambia's creditor committee, said the talks are at "very early stages, (and) it will be difficult for them to get an IMF deal before the elections; but if they could, it would be a positive."

Next year's general election is scheduled for Aug. 12.

Hopes of an IMF deal lifted Zambian bonds by as much as 1.8 cents on the dollar , taking them to their highest level since late September although they are still changing hands at roughly half face value.