Zambia and Saudi Arabia signed a debt restructuring deal to manage over $130 million of Zambia’s debt. The agreement, made in Lusaka, also included a $35 million loan for building the King Salman Specialised Hospital. This deal comes after Zambia’s agreement with France for debt restructuring as the nation seeks to stabilize its fiscal situation and ensure sustainable economic growth.
Zambia and Saudi Arabia have officially established a debt restructuring agreement, aimed at rescheduling over $130 million of Zambia’s debt owed to the Kingdom. The agreement was executed in Lusaka by the Zambian Minister of Finance and National Planning, Situmbeko Musokotwane, and Sultan bin Abdulrahman Al-Marshad, CEO of the Saudi Fund for Development. Minister Musokotwane emphasized that this agreement reflects a shared commitment to resolving Zambia’s debt issues, promoting fiscal sustainability, and stimulating economic development.
Moreover, the two nations also finalized a secondary agreement for a $35 million loan to support the construction of the King Salman Specialised Hospital in Zambia. This agreement follows a recent arrangement between Zambia and France to restructure its debt, in line with objectives set forth in a program supported by the International Monetary Fund. This cooperation is anticipated to assist Zambia in achieving a sustainable debt trajectory.
Zambia’s past debt landscape reveals a complex history, having had its public debt forgiven under the Heavily Indebted Poor Countries initiative in 2005, which paved the way for significant investments from various international sources, particularly from Chinese state-owned banks. However, these investments inflated debt levels and interest commitments, culminating in a sovereign default in December 2020. The Zambian government is currently navigating the challenges of a sovereign debt restructuring process under the G20 Common Framework, which has faced criticism for its prolonged negotiations, hindering immediate economic progression.
The backdrop of this agreement stems from Zambia’s persistent struggle with public debt, especially following substantial investments that led to increased debt levels and subsequent repayment challenges. The nation experienced a sovereign default in December 2020, which necessitated a comprehensive restructuring of its debts. The Zambian government is working under the G20 Common Framework to ameliorate its debt situation after years of negotiations, which underscore flaws within the restructuring process critical to low-income countries in similar distress.
In conclusion, the debt restructuring deal between Zambia and Saudi Arabia signifies a crucial step toward stabilizing Zambia’s fiscal situation and fostering economic growth. With additional support for infrastructural development and ongoing collaboration with international partners like France, Zambia aims to establish a sustainable debt management strategy. The experiences gleaned from Zambia’s debt negotiations may also inform more effective approaches for other developing nations facing similar fiscal challenges.
Original Source: www.dailynewsegypt.com
