Zambia clinches $460m debt restructuring deal with Israel

LUSAKA — Zambia has signed a bilateral agreement with Israel to restructure approximately US$460 million in sovereign debt owed to the Israeli state-backed insurer ASHRA, in a deal Finance Minister Dr Situmbeko Musokotwane said was proof the country was restoring fiscal discipline.

The deal, signed at the Ministry of Finance and National Planning on Thursday , sets the repayment window to 2043. Israeli Ambassador to Zambia Ofra Farhi attended the ceremony.

Musokotwane said the deal was the formal conclusion of months of negotiations between the two governments and singled out Israeli Prime Minister Benjamin Netanyahu by name in his prepared remarks.

It is with great pleasure that I welcome Your Excellency Ms Ofra Farhi and your delegation to the Ministry of Finance and National Planning and address you today at this important event, which marks the successful conclusion of the debt restructuring negotiations between the government of the Republic of Zambia and the government of Israel.

— Situmbeko Musokotwane, Finance and National Planning Minister

The underlying facilities, Musokotwane said, supported agriculture, defence and healthcare — areas the Zambian government continues to prioritise. He framed the agreement as part of the wider debt-restructuring effort following Zambia's November 2020 sovereign default.

"Looking back to when the country defaulted on its external debt in 2020 to where we are today, we can only be proud of all the milestones achieved and the goodwill from you, our partners," the minister said. "These milestones are proof that the government of Zambia is committed to restoring fiscal discipline and debt sustainability."

The restructuring, he added, provides relief from immediate debt-service pressures and creates fiscal space for infrastructure and social-sector spending. He reaffirmed Zambia's commitment to honouring its debt obligations and to resuming service payments under the new bilateral terms.

Ambassador signals a wider trade reset

Ambassador Farhi said the bilateral agreement was executed on 12 May 2026 and that timely payment of sovereign debt was "essential to support continued economic cooperation" between the two countries.

By finalising this restructuring, we are clearing the path for a new era of economic engagement. With greater financial certainty, we expect a surge in bilateral trade and private-sector investment, ultimately translating into enhanced wealth creation for the nation and its citizens. Israel's expertise in agrotechnology, water management, and renewable energy aligns perfectly with Zambia's development goals.

— Ofra Farhi, Israeli Ambassador to Zambia

Farhi pointed to access to energy and water as both a development necessity and a vector for social transformation, and framed the agreement as a foundation for collaboration between Israeli innovators and Zambian entrepreneurs on food security, social transformation and sustainable industrial growth.

Background

Zambia defaulted on its sovereign Eurobonds in November 2020, becoming the first African country to do so during the pandemic era. Since then, the government has worked through the G20 Common Framework with official bilateral creditors alongside parallel deals with private creditors. Data from the IMF shows debt restructuring is now broadly complete — the Fund's most recent assessment, also reported in Lusaka this week, put coverage at approximately 94% of the restructuring perimeter.

Israel's debt was managed through ASHRA, the State of Israel's Foreign Trade Risks Insurance Corporation Limited, which insures Israeli exporters and contractors against payment default in emerging-market jurisdictions. Bilateral restructurings outside the Common Framework's headline track typically run with less public visibility; their cumulative effect on Zambia's debt-service profile is significant.

What to watch

Two near-term tests. First, whether the Ministry of Finance publishes the full restructured-loan terms or includes the deal in a forthcoming debt-sustainability analysis. Second, the IMF's successor ECF programme, currently in advanced talks with Lusaka, will assess every bilateral track for consistency with debt-sustainability targets — the Israel agreement should ease that scrutiny rather than complicate it.

Frequently Asked Questions

These are the questions readers have been asking since the signing. Short answers follow, drawn from the Ministry of Finance public address.

How big is the Israel deal?

In short, US$460 million in debt owed by Zambia to the State of Israel through ASHRA, with repayment scheduled by 2043. The key is that the agreement was formally executed on 12 May 2026.

Who signed for Israel?

Simply put, Israeli Ambassador Ofra Farhi led the delegation at the Ministry of Finance in Lusaka. she signed for the State of Israel; Musokotwane signed for Zambia.

What did the original Israeli facilities cover?

According to Musokotwane, the underlying facilities supported agriculture, defence and healthcare. Data on the line-item breakdown of the restructured obligation has not been publicly released.

Why does it matter?

The answer is that the deal is one of several bilateral restructurings following Zambia's 2020 default. Research from the IMF shows debt-restructuring agreements now cover approximately 94% of the perimeter. Each remaining bilateral track moves that figure higher.

What did Ambassador Farhi say about future cooperation?

In other words, Farhi flagged Israeli expertise in agrotechnology, water management and renewable energy as areas of fit with Zambian development goals, and said the deal "clears the path for a new era of economic engagement" with a "surge in bilateral trade and private-sector investment" expected to follow.

Sources

Ministry of Finance and National Planning: signing ceremony public address.