To ask Her Majesty's Government what assessment they have made of the risk of default on national debt in Zambia and other states which are receiving temporary relief; and what steps they are taking to limit the damage caused by any such defaults.
19 October 2020
The UK is strongly supportive of work to safeguard debt transparency and sustainability in lower-income countries. The UK conducts regular assessments of macro-stability in lower-income countries, informed particularly by the debt sustainability analyses carried out by the World Bank and the International Monetary Fund (IMF). In line with the classification arrived at by the IMF and World Bank in 2019, the UK currently assesses Zambia's debt to be on an unsustainable path. The Minister for Africa discussed the issue of debt with the President of Zambia and the Minister of Finance during his visit to Zambia on 8 and 9 October.
In April 2020, the G20 and Paris Club of official creditors announced a historic joint Debt Service Suspension Initiative (DSSI) for the least developed countries. The DSSI has supported 43 countries, including Zambia, which have requested suspensions, freeing up a total of US$5 billion in fiscal space to fund the countries' COVID-19 responses. Given the depth of liquidity needs in these countries, the UK supports an extension of the DSSI into 2021.We expect further debt relief to be required. This should be on a case-by-case basis in the context of an IMF programme to ensure it is tailored to need, with equitable burden sharing among all official and private creditors. To ensure this process is efficient and effective, on 25 September the Chancellor met with his G7 counterparts to discuss a future Common Framework for debt relief between the G20 and Paris Club, as well as possible extension to the DSSI. A joint statement detailing this discussion is available on the US Treasury website.