World Bank announces $750M bailout package for Zambia

By James Kunda

LUSAKA, Zambia (AA) – The World Bank has announced a $750 million bailout package for Zambia to help support health, education, and social spending in the debt-ridden country.

"The WBG’s (World Bank Group) support for the Zambian people, through the International Development Association, aims to disburse $750m to Zambia in 2022 for impactful projects in health, education, and social assistance, as well as in the form of budget support," reads a statement issued by the bank following a meeting between its President David Malpass and Zambian President Hakainde Hichilema on Wednesday.

The duo met on the sidelines of the 77th United Nations General Assembly in New York.

They discussed Zambia's progress in implementing highly positive economic and social reforms, agreeing that debt reduction with both official and private sector creditors is required to allow the country to restore growth, investment, and economic confidence, according to the statement.

“President Malpass and President Hichilema talked about the upcoming meetings of Zambia’s creditors and jointly urged rapid progress on the completion of the Memorandum of Understanding (MoU) by the official bilateral creditors and subsequent agreement with commercial creditors.

“President Malpass highlighted that a deep debt reduction of 45 per cent in net present value (NPV) terms, consistent with the Joint WBG-IMF Debt Sustainability Analysis, is essential,” it said.

The news of the loan in the country raised concerns among some civil society and opposition political parties, but Hichilema stated that all new financing sourced by his government would be in the form of zero to low-interest loans and grants to support debt restructuring.

Based on the economic transformational agenda they have put in place, Zambia, being a member of this financial facility; qualifies for zero to low-interest loans and grants aimed at reducing poverty by boosting economic growth, reducing inequalities and improving people's living conditions through increased investment opportunities, the president stated on his Facebook page after meeting with Malpass.

He also assured the WB president of his country's commitment to keeping the debt restructuring process moving forward.

Separately, the Zambian president met with International Monetary Fund (IMF) Managing Director Kristalina Georgieva, to whom he expressed gratefulness for the open and frank discussions that led to Zambia's ($1.3 billion) IMF-supported program.

Zambia's external debt currently totals more than $17.3 billion, with China being the single largest creditor, accounting for approximately $6 billion.

To help restore its public finances, the Southern African country is now seeking up to $8.4 billion in debt relief from major lenders, including private funds managed by the world's largest investment manager, BlackRock.