Bloomberg media reports that a key bondholder group is set to reject Zambia’s request for an interest-payment holiday, putting the country on course to become the first African sovereign defaulter since the onset of the coronavirus pandemic.
There is consensus among the so-called Zambia External Bondholder Committee to reject the proposal, with a voting deadline of Wednesday ahead of meetings with creditors on Friday, according to two people with direct knowledge of the matter, who asked not to be identified because they’re not authorized to speak publicly.
The committee’s members hold about 40% of the southern African nation’s $3 billion of outstanding dollar bonds, and at least 25% of each, enough to vote down the proposal.
Bondholders abstained from previous votes that had been set for Oct. 20, prompting the adjournment to Nov. 13 to allow the government more time to convince them to accept the proposed six-month payment freeze.
Zambia said it is seeking equal relief from all external creditors, and the government’s approach to private lenders and mainly state-owned Chinese lenders could set a precedent for a growing number of countries seeking to reprofile debts they can’t afford to service as the pandemic ravages their economies.
The world’s largest economies will on Friday decide on a common framework to co-ordinate future debt restructuring among private and official lenders.
But the finance ministry has failed to provide transparency on its debts to Chinese lenders or inform bondholders of any progress in reaching a deal with the International Monetary Fund on an economic program, one of the people said.
There has also been no direct talks between the government and bondholders, the person said.
Zambia’s finance ministry didn’t respond to four calls and text messages seeking comment.
The government of Africa’s second-biggest copper producer has already missed a $42.5 million coupon payment scheduled for Oct. 14 on its $1 billion bonds due 2024, and a 30-day grace period ends on Friday.
Zambia’s already said it won’t pay if it isn’t granted a standstill, which would trigger a default giving bondholders the right to demand immediate repayment of the capital.
S&P Global Ratings Services last month cut its assessment of Zambia’s debt to “selective default”.
While Zambia has said it’s seeking the relief from private creditors as part of the G-20’s Debt Servicing Suspension Initiative for low-income countries struggling from the economic fallout of the pandemic, the southern African nation’s debt troubles have been building for years.
The IMF already warned in 2018 that Zambia was at high risk of debt distress, and the government continued adding billions of dollars more in external debt, which has climbed to about $12 billion.
This is what happens when you borrow recklessly. There was reason previous presidents like Levy & Bwezani avoided contracting significant debts. They knew the impact of debt on the economy. They drew a plan to complete everything by 2030 that the PF wanted to complete by 2020.
Do you recall what your President said about borrowing the day he was commissioning that fly-over bridge?
PF government has brought this country and economy on its knees!
Ndipo tizavutika,we will be worse than Zimbabwe
KAIZER wont comment here because he just knows how to deal with cadre issues. Zambia is broke and the more we continue to burry our heads in the sand the worse it will get for us. I urge PF to accept they have failed and start a smooth transition to a UPND leadership that is capable of dealing with debt issue.
We told these morons about unsustainable debt but they never listened Fossil Chikwanda called us lunatics…..now look at them begging for extension everywhere. Extensions means more interest but these morons dont care.
How do you start seeking debt relief, while you continue speeding recklessly, telling village headmen to cheat their way to get social cash transfer and say you are not ashamed to have over borrowed?
I hope this is not true. It could trigger a rapid depreciation of the kwacha, a freezing of the foreign exchange market, cessation of commercial credit lines for Zambian business houses and possible shortage of everyday goods. Now who wants that sort of thing?
PF NIMA LOZA YA PARTY
The pregnant woman has now come home…..
@ TheEngineer actually she already gave birth n the baby is now milking us dry
@SkyLab
I hope its not twins other wise you are in S.HIT
Matero University graduates were saying
– every country borrows
– their clueless leader “am not ashamed of the debt”
Now you will see what default means…..
Oh no, president Lungu told Zambians he had secured a moratorium of one month to pay the bondholders and the Chinese gave him the money to pay this November 2020. So, now should just pay the debt. Zambia should not be embarrassed every time with default to creditors by the humble leader.
Bondholders are in business, just pay them and not continue dithering, not even responding to phone calls – shameful attitude. Just pay.
You thought they will backoff by giving them one sided conditions.
Edgar Lungu is a serious joker and he is going. My voter’s card ready to send him off to his final resting peace in Chawama.
PF must go!
Where are the PF rats lead by KZ on LT ?
The arrogance, the stubbornness, the insolence – even in a home, do you borrow to a level where you choke yourself? Obviously no. Wasn’t free advice given on this issue? Our self created problems started way before covid, even out going Bank of Zambia governor stressed this fact before he was fired.
And somebody says I still want to be on the ballot next year despite clear mismanagement of the economic affairs of the country. Zimbabwe here we come, no shred of doubt here unless one is so duffed
KZ has no brains to say anything. What tangible knowledge does he possess about debt structure and economic fundamentals.
Zambia is heading towards being the next Zimbabwe. These minions who have looted funds through corruption will not suffer however the general population, the working class will bear the brunt.
Remember what happened in Zimbabwe a percentage of people moved overseas because of various reasons. The same will happen here.
Unfortunately for lungu/ KZ and his minions won’t able to settle in Europe or North America ad they don’t have the passport. Maybe China will accept them
Nobody wants this to happen and the pain it may bring to ordinary Zambians. But that is the true state of affairs; we are going the way of Zimbabwe. The sad thing is Zimbabweans had sanctioned imposed on them. We don’t. We jumped off the cliff by choice.
Any form of relief creates an artificial picture going into the elections that things are not as bad as they really are. And it would be an election boost for the PF. Effectively, it is foreigners interring in free and fair in elections in Zambia by putting their thumbs on the scale. Giving the PF breathing room to continue their 11th hour handout bribery schemes.
Nobody wants this to happen and the pain it may bring to ordinary Zambians. But that is the true state of affairs; we are going the way of Zimbabwe. The sad thing is Zimbabweans had sanctioned imposed on them. We don’t. We jumped off the cliff by choice.
Any form of relief creates an artificial picture going into the elections that things are not as bad as they really are. And it would be an election boost for the PF. Effectively, it is foreigners interring in free and fair in elections in Zambia by putting their thumbs on the scale. Giving the PF breathing room to continue their 11th hour handout bribery schemes.
People think this is all a joke.
Zambia will end up being worse than Zimbabwe. At least they have sovereignty in Zimbabwe, but in Zambia the Chinese will take over.
Ati ifintu ni Lungu? Really?
Tighten your already very tightened belts.
Where is our 5 million dollars you paid those French Lizards for debt resolution…really laughable…
What we face here is a very dire socio-economic catastrophe that could easily deteriorate into serious calls for the President himself to resign before the end of his term of office.Surprisingly though, ECL is oblivious to the dynamite lit under his throne. He prefers meeting chiefs and inspecting prisons to addressing the hissing bomb
Continue praying to your devil for us to default. It hasn’t happened and will never happen. Look how desperate and evil you are wishing the worst for a country in which your mother shltted you in. This country made you who you are today and yet you are happy to wish it the worst just because a whlte nation has offered you opportunity to clean their toilets and old people’s backsides. What a shame and disappointment. You will die heavy hearted there abroad. I would rather die with my pride as a proud zambian. You neo slaves. Fuseke!!!!
@KZ No one wishes evil on the country you moron! Get it in your thick skull that well meaning Zambians have continuously been warning and even offering advise about the debt and other economic affairs. You and your cohort have on the other hand buried your heads in the sand and misled those suffering that all is well and you are in control. The nonsense you spew above just shows how childish and id.otic you are. What has this got to do with people abroad or whatever they maybe doing? I think it’s time you stopped such uncivilized comments. We are in a global world and people can live and sell their labour where they wish. How come you don’t condemn all those foreigners living in Zambia? Aren’t they supposed to be back home serving their own countries, if we go by your own primitive…
Where is that fat boy at EAZ? What’s his name ..he has disappeared like a fart in the wind.
Zambia is about to default so me and the fired former central bank Governor we’ve been vindicated . The economy has been sick for a long time.
Let’s make Zambia Great Again 2021 Let’s Vote Wisely
I’m not sure which is worse, to default on our debt or seeing how fellow Zambian’s wish ill on themselves just because they are being manipulated by foreign media hell bent on regime change. How does one even compare Zambia with Zimbabwe? This is an admission from oppressors that they destroyed Zimbabwe because it went against their interests. We need to unite as Zambians and see through these silly sponsored articles. This will not end here. When these people are successful in putting their puppet in office, the next stage will be to demand the we give up our sovereignty.