Three years after defaulting on its foreign debt, Zambia is still trying to reach agreement with all its creditors on how to manage this situation. This has left the southern African country in a state of development finance limbo. It is handicapped in raising the funds needed to generate jobs, build infrastructure, provide health, education and social services and deal with climate change. Its president, Hakainde Hichilema, has warned that the situation threatens to undermine its democracy.
Zambia’s inability to reach a definitive agreement with all its creditors is not for lack of trying. But it has had bad luck. It is the test case for the Common Framework that the G20 international forum established in November 2020 to deal with the debts of low-income countries. The framework was expected to result in all creditors making comparable contributions to help a defaulting country resolve its debt crisis.
Zambia’s experience demonstrates that the Common Framework has failed to deliver.
