The Zambian government said in a presentation to investors on Friday that it hoped it would agree debt relief terms with official creditors by the end of the year or early 2023.
Zambia was the first African country to default during the COVID-19 era as it struggled with debt that reached 133% of GDP at the end of 2021.
The presentation, made to holders of Zambia’s three Eurobonds, said that a present value reduction of $6.3 billion, or 49% of the external debt being restructured, was needed by 2027, to meet targets set by the International Monetary Fund last month.
World Bank head David Malpass had previously said that debt reduction of 45% was “essential”, something some bondholders had said would not be acceptable.
The presentation said the southern African country aimed to reach an “in principle” restructuring agreement with a bondholders’ committee in the first quarter of next year.
It also said it aimed to implement the Eurobond restructuring alongside bilateral and other commercial debt restructuring in the first three months of 2023.
The government of Africa’s second-largest copper producer added that creditors’ preferences would be accommodated as much as possible in the restructuring.
Relief could range from “substantial” haircuts with a short maturity, to “very long” maturity extensions with concessional interest rates and no cut in the original value of the loan, it said.
According to the IMF, which holds its Annual Meetings with the World Bank in Washington next week, Zambia needs $8.4 billion of “cash debt relief” – cutting both interest payments and loan repayments – from 2022 to 2025.
Zambia’s external public debt reached $14.87 billion at the end of June 2022, the finance minister said last month.
The government said in March that external debt was $17.27 billion at the end of 2021, a third of which was held by Chinese lenders. In July, it cancelled $2 billion of undisbursed loans.
The IMF in late August approved a $1.3 billion, three-year loan to Zambia, a crucial step in the southern African country’s quest to restructure its debts.