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Alba Iulia
Wednesday, October 21, 2020

Broke: Zambia pushes to defer Eurobond interest payments for six months

Economy Broke: Zambia pushes to defer Eurobond interest payments for six months

Zambia has launched a vote with its Eurobond holders, proposing to defer interest payments on its three outstanding dollar-denominated bonds until April 14, 2021.

Zambia has $3 billion of Eurobonds outstanding and owes $2 billion to commercial banks, $2 billion to the International Monetary Fund and World Bank and another $3 billion to China.

The statement said Zambia had engaged with the IMF in recent months and was working in “close coordination” with the fund to establish strategies required to return its debt to a sustainable level.

“The proposal is intended as a first step to provide the issuer and its advisors the necessary breathing time to finalise the debt sustainability analysis and to define the parameters of a debt restructuring strategy aimed at putting the debt on a sustainable trajectory, which is a pre-condition to IMF lending,” the government said in a statement.

The country’s dollar bonds suffered sharp declines, with the 2022, 2024 and 2027 issues ZM082877959=, ZM105638671=, ZM126708157= all down nearly 3 cents in the dollar to trade around 53 cents in the dollar.

Zambia said it would conduct a call with investors on Sept. 29 to discuss the plan and set a deadline for the vote on its proposal set for October 16.

“The Ministry of Finance has announced a Consent Solicitation to holders of its (i) U.S.$750,000,000 5.375 per cent. Notes due 2022, (ii) U.S.$1,000,000,000 8.500 per cent. Notes due 2024 and (iii) U.S.$1,250,000,000 8.970 per cent. Notes due 2027 (the “Notes”) to request the suspension of debt service payments for a period of six months from 14 October 2020, effectively covering the upcoming three coupon payments due on 14 October 2020, 30 January 2021, and 20 March 2021 on the respective Notes.”

It added, “The Republic of Zambia is confronted with a very challenging macroeconomic and fiscal situation aggravated by the COVID-19 crisis that has severely affected the country’s public finances. A combination of declining revenues and increased unbudgeted costs caused by the COVID-19 pandemic have resulted in a material impact on the Government’s available resources to make timely payments on its indebtedness leading to increasing debt servicing difficulties.”

It said this is the reason why the Republic of Zambia has taken the decision to apply for the G20 Debt Service Suspension Initiative in August 2020 and is requesting similar debt service suspension from its commercial creditors, including its noteholders.

It said it continues to actively engage with the IMF to secure financial assistance within a programme of reforms that would help in stabilising the macroeconomic outlook of the country and restoring its fiscal balance.

“In this context, the Government is committed to finding a consensual and collaborative resolution to the debt sustainability issues it is currently facing.”

48 COMMENTS

  1. 10 billion $ in Debt…wow.,,,I truly wish the villagers can understand what’s going on.
    This is crazy….where are you guys going to find the money to pay back.
    Lungu should have not bought the plane with the borrowed Money.

    That is a kabova move. Buying new clothing with borrowed money.

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  2. Failing to service debt means leadership has failed. We can use covid-19 as an excuse the facts won’t change.
    Lungu being voted back into office in 2021 won’t change a thing.

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  3. No IMF resident representative up to now in Lusaka. The IMF released emergency Covid-19 lending to a number of fellow African countries. Zambia’s debt situation is the most reckless in class.

    27
  4. Well well well, how did we get to this point again? We have crowns in govt there only to entertain kids and fo nothing else.

    23
  5. The proposal is intended as a first step to provide the issuer and its advisors the necessary breathing time to finalise the debt sustainability analysis and to define the parameters of a debt restructuring strategy aimed at putting the debt on a sustainable trajectory, which is a pre-condition to IMF lending,” the government said in a statement.

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  6. Don’t think just because your bally is broke then the country is too. It’s called financial management you dumb rocks

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  7. This is scary…..US$10 billion….in debt…the country is chocking….just how did we end up here….and where is the money????

    26
  8. The Zambian Goverment is Broke, It has confessed! The PF goverment is clueless. No amount of debt restructing will save this government from itself. Lungu is clueless. He and PF need to resign. Immediately. Once Zambia enjoyed debt restructing advantage from being part of HIPC–Heavily Indented Poor Countries. It had sustainable debt. Now it has gone back to a class of HIPC, with 10 billion dollars. Yes, 10 billion dollars, with constrained revenues. Lung is a drunken sailor on the heavily debt-laden ship named Zambia. And the ship is running aground! Zambia, wake up and remove Lungu. Even today. He is as cluessless as incompetent. Unifit to be president of Zambia.

    22
  9. The Zambian Goverment is Broke, O, Lungu!. An immitation of a president. The PF goverment is clueless. No amount of debt restructing will save this government from itself. Lungu is clueless. He and PF need to resign. Immediately. Once Zambia enjoyed debt restructing advantage from being part of HIPC–Heavily Indented Poor Countries. It had sustainable debt. Now it has gone back to a class of HIPC, with 10 billion dollars. Yes, 10 billion dollars, with constrained revenues. Lung is a drunken sailor on the heavily debt-laden ship named Zambia. And the ship is running aground! Zambia, wake up and remove Lungu. Even today. He is as cluessless as incompetent. Unifit to be president of Zambia.

    13
  10. End of the road. We have been preaching against senseless borrowing for a while now. Unfortunately I can see Zimbambwe in Zambia just because one selfish leader. Ena nanonka. Now let’s see who will suffer? Lelo lelo, inenshaliko…

    10
  11. Lungu needs money for campains and to bribe voters…….

    No amount of restructuring or debt writoff will save Zambia, lungu will only drag the country back into the red again……and again….

    14
  12. @Analyst Zambia typing in bold letters does not make your post worth more reading than the article at hand. Psychologists say people who delight writing in bold letters are eccentric and choleric.

    Back to the lecture at hand, there is hardly any economy in the world that is currently not facing problems with debt servicing. Germany is just about to incur over a hundred billion Euros in debt to get it’s economy back to pre-covid status. Kenya’s debt totaled over US$6.5 billion as of 2020.

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    • ist About About debt servicing capacity, whether an economy can be boot-strapped or not – FRG is well capable and knowledgeable to weather ist debt-storm. Zambia paddled ist canoe perilously and recklessly close to the brink of Kalambo Falls…ati fikaisova, mwanya bafik#la, Voting like a$$holes while damning your children’s Futures to the incinerator! Afrika, my Afrika. Thousands of capable africans Chose to live their one life in the Diaspora, you hounded them out in the name of what? Even now you beg Lazard to Change your diapers whilst capable africans are side-lined out of power-madness! Incurring more debts to renegotiate debt using Shylocks and personality cults…CUPID STUNTS!!!

  13. This is a good time to remember who has been pushing for governments to take on this debt. The Rothschild barns and their IMF/World Bank Eurobonds.

    Default on the debt, and use raw materials to create a strong local currency. Confiscate the mines.

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  14. Kaizar Zulu September 22, 2020 At 7:27 pm

    “…Don’t think just because your bally is broke then the country is too. It’s called financial management you dumb rocks..”

    Then what do you call the worst performance by kwacha amongst all currencies ?????

    Is it also currency management ???

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  15. This is a good time to remember who has been pushing for governments to take on this debt. The Rothschild barons and their IMF/World Bank Eurobonds. The people should’t be made to pay for their gamble of using multi-trillion dollar bailouts to keep the banks going.

    Default on the debt, and use raw materials to create a strong local currency. Confiscate the mines.

    1
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  16. Spaka go and see the effect of covid on the Same so called rich nations you diasporans are inconveniencing by living there when you not wanted. No economy is immune you dull hyena

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  17. Where is BR Mumba Sr the economist….hiding in plain view….unfortunately PF bandits will come up with a catchy song for the campaign and drunk Zambians will start dancing all the way to the polling station…..and that’s how we end up with Bandits as Presidents…..

    12
  18. Where is BR Mumba Sr the economist….hiding in plain view….unfortunately PF bandits will come up with a catchy song for the campaign and drunk Zambians will start dancing all the way to the polling station…..and that’s how we end up with Bandits as Presidents…..and foreigners taking over everything

    11
  19. What a shame to these Mwanks, we told you that economy has hit a cliff.

    The man is just drunk in state house and you expect the economy to grow by what percentage?

    Chibuku economy

    PF must go!

  20. And those Mwansabombwe mangwams where too happy to vote for these Mwankoles, did they know and understand how these debts and Lungu’s recklessness will affect the economy?
    Even that little Barclays Bank robber thief, Sosala, does he understand even half what this indebtedness means for the country? The old man never grows and always childish and you wonder how such useless chap could ascend to be paramount chief of a big respectable tribe? Malabisi!!

  21. These things are normal in economics. The world is undergoing a recession right now so no need to make it sound as if Zambia is the only economy that’s struggling. All we need is a financial plan on how to service the loans which I believe is already in place considering that an extension date has already been proposed. Absolutely no need to panic, things are in control.

  22. KZ

    Even with out covid Zambias economy and kwacha were headed to the scrap heap ….

    Covid is a very convinent excuse for lungu but the west is not falling for it …….that’s why they refused to give lungu any covid money , it would have made no difference

  23. Meanwhile, God has been kind and spared us from Covid 19, but we still blame it for where we were long before Covid came. Africa Confidential kept reporting that Zambia is in danger of defaulting and the Lungu regime kept denying and calling it fake news. Ifya kulila ubushiku fimoneka in the vomit in the morning. Now it is daylight, we can see who ate the chicken last night.

  24. THE USA CAN PRINT 2 TRILLION DOLLARS AND NOBODY BAT’S AN EYE LID BUT ZAMBIA OWES 10 BILLION DOLLARS AND ALL HELL GETS LOOSE.
    WHAT IS PAINFUL IS THAT WE HAVE ALL THOSE RESOURCES WHICH BENEFIT THE GKENCORES OF THIS WORLD.
    ZAMBIA SHOULD IMPLEMENT A NEW ECONOMIC MODEL IMMEDIATELY. FOREX ALLOCATION SHOULD BE MANAGED TO SERVICE THE DEBT.
    AND hh IS NOT THE SOLUTION AND WE KNOW WHY

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  25. THE USA CAN PRINT 2 TRILLION DOLLARS AND NOBODY BAT’S AN EYE LID BUT ZAMBIA OWES 10 BILLION DOLLARS AND ALL HELL GETS LOOSE.
    WHAT IS PAINFUL IS THAT WE HAVE ALL THOSE RESOURCES WHICH BENEFIT THE GKENCORES OF THIS WORLD.!
    ZAMBIA SHOULD IMPLEMENT A NEW ECONOMIC MODEL IMMEDIATELY. FOREX ALLOCATION SHOULD BE MANAGED TO SERVICE THE DEBT.
    AND hh IS NOT THE SOLUTION AND WE KNOW WHY

    1
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  26. @Kaizar Zulu at least have some respect for your friends parents and by the way am American Citizen and am a federal employee ok….and my Father is not dull….Thank God he lives here in the USA

  27. @Kaizar Zulu with your silly insults you’ve chased all the intelligent bloggers on Lusaka Times,,,notice how you comment all by yourself 24/7…isn’t that sad,,,get a life bro,,,,you might be leading a very sad life…you sound like a sadist…..

  28. Projects like Zambia Airways which adds no value, at this time has added more debt to Zambian government debt. This debt will never be recovered by running Zambia Airways from borrowed money. Post ponding payments will put Zambia in trouble. Do we have competency professionals who can help the government from coming out of this mess?

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  29. Despite this crisis, Edgar Lungu will be in Monze today to discuss starting a new district east of Monze. And it’s just about done already because he cannot travel for nothing. And he will appoint one of the zealots in the PF Monze branch as a District Commissioner. To the villagers in Monze, this is development. The Finance Minister Bwalya Ng’andu has to find money every month to pay the salary of the new DC and his support staff. Meanwhile he wants Eurobond-holders to give Zambia relief on interest payments. Will it work?

  30. Can just some here like Kaizer Zulu accept that they have made this country broke . This is the reason why they have been announcing even a normal chinfina and BID accident at covid19, its because they wanted a relief. Every normal investor or donor knows that this government has over borrow and they cant all blame covid19, even before covid19 our ecomy was not doing well. This is total poor leadership have never seen, its like home you`re a father and you borrow more than your income and how do you expect your family to survive? Meanwhile the president, Minister, Bamusanina bwali (eg Ntewewe ) and lusambo are busy distributing money. #Kwena bamwankole mulimbifi.

  31. @Zambia First-you nailed it my man. “…ZAMBIA SHOULD IMPLEMENT A NEW ECONOMIC MODEL IMMEDIATELY…FOREX ALLOCATION SHOULD BE MANAGED TO SERVICE THE DEBT.
    AND hh IS NOT THE SOLUTION AND WE KNOW WHY…”
    Spot on!!!!

  32. This PF has made this country almost bankrupt, that’s where we are going if we are not yet there. Soon we are shall see some of these creditors taking over our national assets. Failed government. Shame shame shame ba mwankole!

  33. Anonymous if you are American what are you doing here or concerning yourself with our country? You are a foreigner so please do not comment on our internal affairs. Toilet cleaner ati federal employee. Kikiki. You even moved your dull father to America. I am sure he is proud. Is that a measure of success these days?

  34. Hopefully the tax payers cash hasn’t ended up on the mansion building sites in Swanziland and mansions dotted around statehouse

  35. Mr Zulu. Stop taking crap. This Ex boss of yours lungu has destroyed this country.

    The amount of looting and corruption had been unprecedented.

    This is the same lungu who announced himself as I have no vision.

    This same lungu who stole money from a client. Once a thief will always be a thief.

  36. The country is in stress economically, i don’t think it is right for any meaningful Zambian to start calling out names on each other instead of start bringing solutions on the table, at this moment no matter who is going to be in power they will have to pay back the money the only thing that will kill this country is not realizing that the country is collapsing, lets learn to work for the good of our country and not just ourselves, remember you have children who will have other children, imagine how they are going to live when this country collapses, look whats happening in Libya, Burundi and many other countries its quite sad we can’t afford to reach that level, we can do better we can’t all be economics or in financial world but we expect those entrusted to work in this institution…

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