The planned engagement of a private company to pay off Zambia’s US$ 750 million Eurobond is a disaster in-waiting. JCTR is apprehensive with regard to use of a private equity to refinance the country’s Eurobond as the cost of the external debt might become too exorbitant to bear in the medium to long-term. To this end, this might further exacerbate the country’s foreign debt which currently stands at a staggering US$9.3 billion.

Recently, the Ministry of Finance, in the 2018 First Quarter Economic Performance Report, announced that, “management of the country’s debt has been prioritized. Regulatory and administrative measures to slow down the growth of the debt stock have been put in place in accordance with the medium-term debt strategy.” Certainly, the proposed refinancing strategy of the country’s Eurobond negates this same principle as it will have the medium to long-term resultant effect of pushing back Zambia into being a highly indebted country.

As JCTR, we acknowledge that there is an urgent need to restructure Zambia’s external debt to thwart a possible default. A default on external debt contracted through the international issuance of the country’s bonds might attract vulture investors and hence lead to a turbulent and devastating financial crisis. However, with the knowledge of hindsight and having been involved in the country’s debt cancellation campaign under the Jubilee Zambia Debt Campaign, we strongly object to the proposed strategy to refinance Zambia’s Eurobond due in 2022 by way of private equity especially that the terms and conditions of this proposed transaction are not publicly known.

We contend that ignoring the country’s current indebtedness while simultaneously contracting external debts from hedge funds under the guise of refinancing the Eurobond is a recipe to disaster. The JCTR is therefore appealing to government to undertake a prudent and comprehensive risk assessment of the proposed and impending public debt refinancing option and ensure that the country’s sovereign assets are securely covered from being sequestered by vulture funds.

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8 COMMENTS

  1. Totally and absolutely right! Where is Haabazoka and his Russian Economic Theory? I hope he can see that despite is Russian PhD, the JCTR has a better and practical understanding of the Economy. They have seen it before and have dealt with it as well. Their opinion is similar to Kanyama’s view. Haabazoka needs to tone down his vicious appetite for grabbing “Headlines” over our economy – it is a serious business.
    The guy doesn’t even understand proper economics – and how he became a Director of that Business school at UNZA is what I don’t understand. Sadly, the repercussions of his position as the Director are enormous because his School will be chunning out thousands of half cooked graduates with unhelpful degrees!

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  2. Generally Zambians are financially illiterate

    What is a vulture fund ?

    You owe $10m. Your borrower, for political or other himanitarian reasons, does not enforce his rights

    Vulture fund approaches borrower and says let me pay you $2m in cash. Assign and sign over that debt to me

    Vulture fund then gets hold of you and enforces for the full $10m you owe. Internationally, he can attach zambias embassy properties or grab BOZ reserves sitting in international banks

    Vulture fund cannot get $20m off you. He can only get WHAT YOU OWE.

    Manage your panties properly and scavengers wont find their way in !

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  3. Thank you JCTR! Keep the heat on, until they understand the repercussions of their addiction to foreign debt. Trouble is brewing in the house.

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  4. Ah. This debt thing again. JCTR surely knows that the sins of the fathers are settled by coming generations as we do for Eve and Adam. The purpose of any generation is to pass it on to be finished or improved upon. Surely, coming generations should also pay a share for what we have built for them to inherit.

    And John Maynard Keynes showed the mighty USA and copycat China that a sustainable dynamic state should perpetually contract debt to provide for now and to finance what it owes. The key to ensuring that the dominoes don’t topple over is sound economic policies and management. The USA and China owe the World more than the rest of the World owes each over. But who cries about their debt? Don’t you get it?!!

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