Top African Countries Asking IMF For Debt Forgiveness as Nigeria Denies Debt Relief Talks

Top African Countries Asking IMF For Debt Forgiveness as Nigeria Denies Debt Relief Talks

  • Nigeria has denied it is in talks with IMF for debt restructuring, a statement corroborated by IMF president David Malpass.
  • Reports say about 20 African countries risk debt default as global inflation and financial shocks reverberate.
  • Chad, Zambia, Ethiopia and Somalia have approached the International Monetary Fund for debt relief

Last week, Nigeria's Minister of Finance, Budget and National Planning, Zainab Ahmed, debunked claims that the country is in talks with the International Monetary Fund (IMF) for debt restructuring as it battles revenue shortfalls threatening its debt servicing capacity.

The World Bank President, David Malpass, stated in Washington that the country had not requested any debt relief from the global lender.

African countries, IMF, debt relief
Top countries in Africa begging for debt relief Credit: Horacio Villalobos / Contributor
Source: Getty Images

African countries in dire straits

According to reports, more than 20 African countries are at risk of debt default, with at least 6 African countries having a debt-to-GDP ratio of more than 100 per cent.

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The multiple shocks of the COVID-19 pandemic, the Ukraine crisis and global monetary conditions have impacted some countries' ability to repay and manage their debts.

African countries are vocal about their need for debt restructuring their debts. In July this year, finance ministers and central bankers from African countries called for quick, comprehensive and significant debt relief for African countries by big economies,

Countries like Chad, Ethiopia and Zambia are already renegotiating the conditions of their external debts under the Common Framework and have faced complications due to domestic and transactional challenges.

The IMF said it has made some progress on its negotiations with Chad in mid-July this year and is the first African country to seek help under the Common Framework. But the IMF also highlighted delays in reaching an agreement with lenders, which include Glencore, a private mining firm.

Chad owes Glencore the most through oil swap deals over 10 years old. Restructuring with creditors is a condition of the IMF's support for debt-distressed countries.

Zambia set up a committee for the restructuring of its debt and chaired by France and China. They have begun with a commitment announced in July 2022, which clears the way for the IMF to give support of about $1.4 billion, which was agreed upon in December 2021 and finally approved in August 2022.

According to reports, Zambia is the first African country to default on its external debt of more than $17 billion during this first phase of debt distress.

Somalia admitted into Heavily Indebted Poor Countries list

Ethiopia's creditors' committee has committed to restructure its debt in August 2022, with the IMF expected to announce restructuring in August.

CNBC reports that on Monday, the IMF reached a staff-level agreement with Somalia to allow a release of about $10 million to the beleaguered East African country once approved by the board.

Laura Jaramillo, IMF chief, said the deal came after an in-person review of Somalia's extended credit facility in Kenya.

Jaramillo stated that if the country continues to progress on reforms, it could reach the completion point of the Heavily Indebted Poor Country's global debt forgiveness process by late 2023.

China promises to forgive 23 interest-free loans for 17 African countries

Meanwhile, reported that China has pledged to forgive about 23 matured interest-free loans for 17 countries in Africa.

Chinese foreign minister Yi said this during an address at Forum China-Africa Cooperation and said the gesture is a demonstration to foster a stronger economic bond with Africa.

The foreign minister stated that this shows how much the Chinese government keeps its words on African development with tangible action.


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