(Ecofin Agency) - Zambia has just begun negotiations for financial support from the International Monetary Fund (IMF). The IMF announced this in an official statement.

“The Zambian authorities have formally requested a financing arrangement with the International Monetary Fund (IMF) to support their reform efforts,” IMF said.

This announcement comes at a time when the Zambian economy has been declining due to several years of crisis. Drought, difficulties in the mining sector, and rising debt had pushed the country to adopt austerity measures in recent years to cope with the situation. However, the covid-19 pandemic that has plagued global economic activity has contributed to the accelerated decline of the Southern African country's economy.

On November 3, the country led by Edgar Lungu (pictured) became the first African country to default on its international debt since the start of covid-19. The copper-producing country failed to make the $42.5 million in interest payments expected by investors on its three Eurobonds on Wednesday, October 14, 2020, as well as at the end of the grace period.

To get out of this situation, Zambia had asked its creditors for six months to build up some cash flow to resume repayment of its international debt. But a majority of creditors refused to grant this request, requiring the country to reach an agreement with the IMF.

"The Fund is currently assessing this request," from Zambia, the IMF said in its statement, adding that a mission is currently in Lusaka for high-level discussions. According to estimates, by the end of this year, the country's external debt could jump to 70% of GDP while growth is expected to plunge to -4.8%.

As a reminder, in 2017, the country had begun negotiations to obtain a financing agreement of $1.3 billion from the IMF, but the Fund rejected the request several times.

Moutiou Adjibi Nourou