Zambia finalized a memorandum of understanding with its its Official Creditor Committee to restructure about $6.3 billion in debt, the finance ministry said.
"We are grateful to all our official creditors, especially the co-chairs of the committee, China and France, and vice-chair South Africa, for their commitment to help resolve Zambia’s debt overhang," Zambia's Minister of Finance, Dr. Situmbeko Musokotwane, noted.
The ministry called the agreement "an important milestone in Zambia achieving long-term debt sustainability."
"The Ministry of Finance and National Planning is hopeful that the formalization of the agreement will further support the progress Zambia is making in achieving a comparable agreement with its private creditors to resolve the debt overhang," the statement said.
The ministry said the next step is to conclude a comparable arrangement with private lenders that would address both Zambia's "need for debt relief" and the principle of comparability of treatment.
The agreements will extend debt maturities over an average of more than 12 years and interest rates will be set at 1% for the next 14 years and up to 2.5% thereafter. There is a mechanism to increase repayments if Zambia's economic performance is better than expected.
The debt restructuring was necessitated by Zambia's declared default on its $18.6 billion external debt in 2020.
Earlier in the day, G20 finance chiefs reportedly welcomed the "ongoing process" to restructure Ghana's debt in their draft. The communique also said the leaders urged an early conclusion of debt negotiations underway for Ethiopia and Sri Lanka.