The International Monetary Fund (IMF) has confirmed Zambia formally requested assistance to navigate a debt crisis.

Zambia became the first pandemic-era sovereign debt default in the continent last month, after it failed to pay a $42.5 million coupon on one of its Eurobonds. The government had earlier indicated it would seek help from the IMF or World Bank to secure its perilous financial situation.

Authorities however declined to issue details of what was discussed during a meeting between President Edgar Lungu and IMF’s Africa department head Abebe Selassie in the capital Lusaka on Tuesday.

Zambia has had a rocky relationship with the IMF under Lungu’s presidency.

However, Finance Minister Bwalya Ng’andu said last month the government was in talks with the IMF over the “appropriate policy instrument” to help manage public debt and that its involvement was important to the “credibility and impetus” of the restructuring process.

Even before the COVID-19 pandemic, Zambia’s economy was struggling due to low prices for its main export – copper — and rampant corruption that shot up during President Lungu’s leadership.

The IMF had classified the country as in debt distress.

The government sought broad relief from its creditors and requested Eurobond holders grant it a deferral of interest payments until April.

But bondholders rejected that request, criticising the government for a lack of engagement and a failure to provide transparency, particularly on debt owed to other creditors, including China.

Zambia’s $3 billion in outstanding Eurobonds is not its only debt. It owes $3.5 billion in bilateral debt, $2.1 billion to multilaterals and $2.9 billion to other commercial lenders.

Debt to China’s Exim Bank amounted to $2.6 billion at the end of 2019, making up the lion’s share of the $3 billion Lusaka owed to China and Chinese entities.

“I need to see concrete commitments from Zambia on macroeconomic policy,” Jan Dehn, head of research at Ashmore Group, told Reuters.

“I do not trust the Zambian government, so I also want to see the IMF agree with the government and define a clear and transparent adjustment program,” he said.

Ashmore is a holder of Zambian Eurobonds, according to the latest filing data for one of its funds.

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