Zambia’s President Hakainde Hichilema can finally find solace as a solution to tackle the nation’s debt crisis has been revealed.

Last year, Zambia became the first African nation to default on its debt payments during the Covid pandemic. It was burdened by loans and high-interest rates that could have improved its ability to invest in crucial social programs and infrastructure development. 

After months of negotiations, Zambia has now reached new repayment terms with its state creditors on up to $6.3bn of debt, including over $4bn owed to China.

The deal, hailed as ‘historic’ by France’s President Emmanuel Macron, is expected to set a precedent for other debt-ridden countries. 

However, President Hichilema acknowledged that there is still work to be done, as more than $6bn is owed to private lenders. 

His election in 2021 was partly based on a promise to address the country’s financial woes inherited from previous administrations and marred by corruption.

While Zambia had already secured a bailout agreement with the International Monetary Fund (IMF), debt restructuring was necessary to unlock much-needed funds and achieve financial stability. 

While specific information about the agreement has not been disclosed, Zambia is anticipated to receive an extended repayment period of more than two decades, accompanied by a three-year grace period where only interest payments are required.

Economists have commended the government’s efforts and expressed optimism about the agreement’s potential to improve Zambia’s economic situation. 

However, they emphasize the need for a clear economic recovery plan to stimulate growth, create jobs, and alleviate poverty. 

By renegotiating the debt terms, Zambia gains valuable breathing space to stabilize its economy, implement necessary reforms, and redirect resources toward healthcare, education, infrastructure, and social welfare.

Although proponents view this as a pivotal chance for sustainable economic progress, apprehensions arise regarding a potential reduction in Zambia’s credit rating, leading to higher future borrowing expenses. Critics also question what the creditors are gaining from the renegotiation, given the limited information available.

Looking ahead, experts emphasize the importance of developing home-grown investment solutions and reducing reliance on external contributors. 

While the IMF is set to release funds to support government spending, attention now turns to Zambia’s private lenders, hoping they will follow suit.