WASHINGTON, Nov 13 (Reuters) - The International Monetary Fund on Friday said it was in talks with Zambian authorities about how best to support the country as it heads toward Africa’s first pandemic-era sovereign default.
Any IMF financial support for Zambia would be contingent on steps to restore debt sustainability, an IMF spokeswoman said, underscoring the importance of every stakeholder making an effort to help countries in distress.
Zambia on Friday said it would not pay an overdue Eurobond coupon before a 30-day grace period expired at the end of the day after its creditors rejected its request to defer interest payments until April.
Asked if a default in Zambia could trigger a wave of defaults across the region, the IMF spokeswoman said conditions varied, but other countries in sub-Saharan Africa (SSA) might need debt restructuring if official financing was not sufficient.
“While debt vulnerabilities are elevated for several countries in the region, country circumstances across the region vary significantly,” she said.
Many countries in sub-Saharan Africa had benefitted from a G20 freeze in debt service payments, and the IMF had also provided some debt service relief and in many cases, new emergency financing, she added.
But some countries would need more official financing and even that might not be sufficient.
“Unfortunately, this will not be enough for some countries whose debt may be pushed beyond the limits of sustainability by the pandemic crisis. In those cases, debt restructuring will be needed,” the spokeswoman said.
The IMF said it cannot interfere in debt contracts between countries and their creditors since it is not a party to those agreements.
However, a country’s willingness to negotiate with the IMF - and accepting its conditions - can help it as it seeks to restructure debts with its creditor.
The spokeswoman said the IMF credit outstanding for Zambia was about $7.8 million, about 0.6 percent of quota. Its last IMF program expired in June 2011. (Reporting by Andrea Shalal Editing by Chris Reese and Tom Brown)
Our Standards: The Thomson Reuters Trust Principles.