Monday, June 17, 2024

Zambia admits its likely to default on interest payments


The Zambian Government has informed its creditors including Eurobond holders that it will not be able to meet its obligations if they do not agree to its proposed interest payment holiday on debt.

Government announced last month it was seeking about $120 million in deferrals from holders of its $3 billion in Eurobonds for six months, while it works on a debt-restructuring strategy.

In a statement, Secretary to the Treasury Fredson Yamba says all creditors have been asked for similar relief, after some non-commercial creditors agreed to a payment freeze under a G-20 plan.

Mr. Yamba explained that due to governments’ limited fiscal space, it will be unable to make payments and therefore, fail to forestall accumulating arrears.

He said the only foreign-currency debt that Zambia will continue to pay on time is to multilateral agencies and debt for a few priority projects that have an immediate economic and social impact.

Eurobond holders are due to meet on 20th October 2020 to vote on the proposal, and a group of holders already said they could not vote in favor without further assurances and transparency from the Zambian government.

Below is the full statement


Lusaka, 13 October 2020 – Following the presentation by the Minister of Finance Dr Bwalya Ng’andu, MP, to Creditors on September 29th 2020, the Government of Zambia and its advisers (Lazard Freres and White and Case) have received a number of questions from creditors asking for further clarification on the Republic’s debt strategy, notably in respect of how it intends to approach the servicing of its external debt in the current environment.

As explained in the Minister of Finance’s Presentation to the Creditors, Zambia is confronting considerable challenges and liquidity difficulties compounded by the impact of the COVID 19 pandemic that has led the Government to request the cooperation of all its creditors. In this regard, the Government is negotiating debt service suspension agreements under the G20 Debt Service Suspension Initiative (DSSI) with all its official creditors and has requested comparable treatment from commercial creditors.

In that connection, the Government has sought the consent of the holders of Zambia’s outstanding Eurobonds to a standstill on debt service for a period of six months until April 2021 while it finalises its Debt Sustainability Analysis (DSA) and seeks to put the country’s debt on a sustainable trajectory.

In view of the urgency of the current situation, the Government has determined to ask all its external creditors to agree to debt service suspension on the same terms. The only FX denominated debt that Zambia will continue to pay on a current basis is debt from multilateral agencies and debt for a few priority projects that have an immediate economic and social impact. More information about the perimeter of such priority projects will be provided separately. To be clear, such suspension will apply to all scheduled payments of principal and interest, including accumulated arrears, for a six-month period while it completes its DSA.

Should Zambia fail to reach an agreement with its commercial creditors (including holders of its Eurobonds) on the terms of the appropriate standstills, as previously stated, the Republic with its limited fiscal space will be unable to make payments and, therefore, fail to forestall accumulating arrears.

The debt service suspension period that the Government is requesting will allow us to work, with the assistance of our financial and legal advisors, and in cooperation with the IMF, and all our creditors including the Noteholders and their Ad-hoc committee, to design a sustainable and equitable debt management strategy. Our common objective will be to normalize our relationship with our valued financial partners as soon as circumstances allow and to orderly address Zambia’s debt challenges. We remain committed to ensuring equitable treatment of all our creditors and ensuring transparency in our engagements.

Should the Noteholders consent to the standstill, we will recognize interest accruing on deferred coupons in the restructuring process, at a rate to be determined in good faith with Noteholders.

The Government would like to take this opportunity to reiterate its strong desire and willingness to use this standstill to engage, with the assistance of its financial and legal advisors, in a collaborative and constructive dialogue with all its creditors to design a sustainable debt strategy in the weeks and months to come.

Issued by:
Fredson K. Yamba


  1. Corruption scandals: 48 Houses Social Security Cash Luxury Presidential Jet Ambulances Fire Trucks Mukula Trees Ndola-Lusaka Rd Malawi Maizegate Fuelgate Swaziland landgate Zesco Loans Corruption scandals: 48 Houses Social Security Cash Luxury Presidential Jet Ambulances Fire Trucks Mukula Trees Ndola-Lusaka Rd Malawi Maizegate Fuelgate Swaziland landgate Zesco Loans

    Of course we knew that… but tgese numskull f00ls were denying that just few days ago. These thieves would auction this country while they enrich themselves.

    LT why are you so late in the conviction of Kambwili and jail sentence on forgery charges? You are too slow!

  2. Kambwili inside for 1 year. Some people are shocked. How come? This man called a sitting president that he looked like aka kwashokwa. And also a dog from chawama. Sata nearly jailed father bwalya for calling him a kandolo. So with the many cases against him, us we knew that azangena somewhere. Now lets watch ndendeule.

  3. Even the Bible says the wise Heed to the warnings how this inept government fails to take advise is beyond even the devil’s comprehension.

  4. Hehehehe……the very first paragraph is interesting. What if the creditors do not agree to the proposed terms of repayment? Oh fellow Zambians how could we do this to ourselves by voting for PF. These are signs of a government on the verge of failure

  5. Seo mwetitukwana when we told you iyi iyenda ku default. There is not much economics or fiscal education you need to see where this was heading. The excuses government gave were similar to the ones on homework eaten by a dog on hand in day. So now we will intensify jailing of opposition leaders and investigations into 30-year old privatization exercises. A mama neo cifundo! Akuti 2021 tipitilize shuwa!?

  6. That’s why Lungu was mute at the last Party Presidents meeting, like a boy being shouted at by a parent for misbehaving. All the issues raised in that meeting are because of his doing or involvement. He is ready for a fight now, with his arms folded. He has bought Anti Riot gear ready!!!

  7. @ Alibaba, actually semantics were being used by KZ n the group. The word default was not being used but debt interest rescheduling.

  8. It is a request to suspend or reschedule as stated by skylab. As a creditor if given an option of getting your money at a slightly later date or getting nothing, which one would you surely go for? It’s not rocket science. Even the economies of those countries you have runaway to are feeling the brunt of covid yet here you are celebrating because you wish Zambia the worst. You will all die with that hate.

  9. And now Fredson Yamba will be fired….watch this space…..makaka bandit Lungu is such a coward he cant handle the truth…just like he fired BOZ governor

  10. Welcome to Zimbabwe Dr Yamba. U should have seen this coming and now its too late. The ECL and PF Govt is busy weaponising Covid-19 to avoid servicing and repaying its debts. With Disputable Elections next year Zambia can forget about access to Western IFIs for Concessionary financing. The Economic outturn after August 2021 Elections looks gloomy should Elections be stolen. International Sanctions are inevitable if there are no free,fair and credible Elections in 2021 in Zambia. Watch this space!

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