Saturday, July 13, 2024

BlackRock accused of planning to make super profits on Zambia’s debt

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BlackRock, the world’s largest fund manager, has come under pressure to delay demands for debt interest payments from Zambia to prevent the country’s finances from spiralling out of control.

Anti-poverty campaigners said BlackRock, which manages $10tn of assets, was among the private sector lenders that had refused to reduce the interest rate or delay payments on Zambian bonds, unlike governments and international agencies that hold the country’s debts.

The charity Jubilee Debt Campaign said it estimated BlackRock, which holds $220m of Zambian sovereign bonds, mostly on behalf of clients in its index-linked exchange-traded funds, could generate a $180m profit if the debts were paid in full.

“This would represent a 110% profit on what we estimate BlackRock paid for the debt,” the charity said.

Zambia, which has cut health and social care spending by a fifth in the past two years to balance its budget, has seen its debts soar in recent years to fund infrastructure projects, many to help the country supplement drought-affected hydropower plants.

Solar energy projects have made the country almost self-sufficient in electricity, but the high cost of borrowing and the Covid crisis has crippled the country’s finances.

Further loans from the International Monetary Fund (IMF) have been tied to commitments to end fuel subsidies to households and businesses, pushing the inflation rate above 20% last year.

Of Zambia’s external debt, 46% is owed to private lenders, 22% to China, 8% to other governments and 18% to multilateral institutions.

China is among the government lenders to agree a longer debt repayment schedule that private lenders, including banks, have so far resisted, the Jubilee Debt campaign said.

The Zambian government has already defaulted on loans from commercial lenders and could default on further loans, risking it becoming a pariah on international debt markets.

Since the start of the pandemic in early 2020, the charity estimates Zambia’s bonds have had an average face value of 59 cents on the dollar, and the average interest rate on its bonds is 8.1%.

Zambia applied for a new G20 debt relief scheme at the start of 2021 but has not yet had any debt cancelled.

Tim Jones, the Jubilee Debt Campaign’s head of policy, said BlackRock had bought Zambian bonds at rock-bottom prices when it was clear the country was already in trouble.

He said: “It is unfair for BlackRock and other lenders to make massive profits out of Zambia’s debt crisis. If BlackRock refuses to cancel Zambia’s debt, then the UK and other G20 countries should support Zambia to stay in default on BlackRock.”

Isaac Mwaipopo, a member of the Zambia Civil Society Debt Alliance, said: “Zambia’s debt crisis is preventing people getting access to healthcare, education and other social services.

“We urgently need all of Zambia’s lenders, including BlackRock, to agree to cancel debt so we can recover from the Covid pandemic and the economic crisis we face. Loans were given at high interest rates, and have been trading at low prices, so it is only fair lenders agree significant debt cancellation, rather than making mass profit out of the Zambian people.”

Negotiations on the debt restructuring are due to take place later this month.

G20 finance ministers are scheduled to meet on 20 April, during the IMF spring meetings, to discuss the progress of the debt relief scheme, known as the common framework.

Zambia, Chad and Ethiopia applied last year for debt relief under the common framework, which the IMF said has yet to be agreed, partly because it requires private creditors to participate “on comparable terms to overcome collective action challenges and ensure fair burden sharing”.

28 COMMENTS

  1. It is PF that got us into this mess. One of the reasons PF got us into this mess is that they didn’t listen to any divergent views. That is why it is important that our current grz should accommodate divergent views. The euro bond loans were just wasted. Remember Clive chirwa?

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  2. Kikikikiki still blaming PF….the genius Politician Mr Know it all…..from bad to worse….watoloka imisu wanyanta pamafi…how nasty …..HH thought running a country is kids play

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  3. How can you accuse a fund manager of not making profit …you can pressure them to delay demands for debt interest payments from Zambia its their money. Again we can forget PF and the warnings we were giving them 10 years ago about what would happen in 2022…ironically the same chaps who were calling us lunatics are now wondering why we keep mentioning PF. Lazy Lungu, Fossil Chikwanda, Sata are all at peace our children are left with this mess.

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  4. Saulosi – So how did we get into this mess your were supporting 10 years ago? The unsustanable borrowing it just came out of nowhere like weeds in rainy season?

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  5. @ 2 Aisha
    Clive Chirwa is just a conman….remember he came up with lies about some buses a year ago….now he has disappeared

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  6. He said: “It is unfair for BlackRock and other lenders to make massive profits out of Zambia’s debt crisis. If BlackRock refuses to cancel Zambia’s debt, then the UK and other G20 countries should support Zambia to stay in default on BlackRock.”

    We are back to this same situation because our politicans dont listen, MMD left as a middleincome country look what Lazy Lungu and PF did…and some goat will say forget about the past.

  7. UPNDs mistake in this is public relations they are very bad at it and dont have the right people in those positions…they have not explained how they will dismantle the debt and the IMF situation.

  8. #1 saya “THE QUESTION IS WHO GOT US INTO THIS DAMN MESS ?
    SPREAD THE WORD”

    I say Bally will fix it!

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  9. Some of you here just talk alot of crap about things you don’t even understand. You think posting 20 comments on an article makes your point valid when all it does is show how desperate for attention you are. People don’t even react to your f00Iish comments. Why not use all this time to do somethung that will help you financially

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  10. If the Zambian Constitution doesn’t change, do not expect help anytime soon.

    GRZ nepotism is keeping Zambians just afloat.

    The president refusing to move to the state House, ask yourself why Lend to this type of Executive?

    The UPND administration shut themselves in their foot.

    Take it with a grain of salt, But the hash function does not.

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  11. I think Black Rock is a reasonable Investments firm like Bovin friends of ZAMBIA There are part of the voluntary team of official creditors in debt sustainability and restructuring methods They understand the cliff on the Zambian debt and if engaged well they could support the lizard inniatives Like any form that buys distressed debt,they bought in view to profit but I donot think as they are unreasonable not to see issues of sustainability to achieve debt restructuring for long-term perform of the Zambian economy as it also seeks the IMF deal engage them properly
    there are ready to listen and support Zambia

  12. It’s the firm behind the feds bailout plans it’s well reasoned capitalized to work with Zambia in debt restructuring methods it’s not matter of discussing well over those costs seemingly huge and an impact on Zambias economic performance it’s even better maybe that they bought off from pure speculators because it shows that Zambias bonds are of value and the economy to such a global well positioned investments firm like black rock The benefits could be moreso apart from this sovereigns in raising capital for Investments with them for Infrastructure

  13. Remove tax holiday on the mines, reverse back S? that makes them deposit their proceeds from copper sales in banks in Zambian and exchange rate will go down to K8 to a USD because of over supply. Then pay off debt like this. At the same time fuel costs will come down by 40%. Simple, no need to cry over spilt milk. Zambia has more than enough resources to sort out it’s financial problems. We just need political will.

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  14. Bad day today,,,,,only negative news is here.
    Anyway, I expect Chushi or what is her name? The Minister of Information and GRZ Spokesperson. She should come out and update the nation on the true status of things, keeping zeee will not help.

    TAX HOLIDAYS were in place in LUNGU`s era and Zambia defaulted, so what makes you think, they can be a solution now?

  15. SOME OF US DONT NEED FINANCIAL SOLUTIONS
    ITS THE COUNTRY THAT NEEDS THAT
    WHAT SOME REFUSE TO ACKNOWLEDGE IS THAT THIS GOVERNMENT TOOK OVER AN UNSUSTAINABLE DEBT
    NOW YOU WANT TO BLAME THEM FOR THE HARDSHIPS
    TELL ME HOW DOES A POOR MAN DOWN AND OUT SUBSIDE HIS FELLOWS AROUND HIM ??
    ANSWER THAT AND I’LL UNDERSTAND THEN
    OR ZIP IT

  16. @ Tarino Orange

    So we still have 2 UNPD lead praise singers. …..Spaka like lilo and Tarino Orange …….Spaka sings auto and Tarino Orange sings bass……and by the way please talk to Mr HH to cut down on his travel….thats alot of tax payers money being wasted

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  17. “Irresponsible lending occurs when a lender is unscrupulous with the lending and provides loans inappropriately. For instance, if they do not obtain enough information about income and expenses. If this was the case with your loan, you can make a claim for a refund.”

    GRZ What’s going on?

  18. If IMF Ignores social media from Zambia they’ll fall in the category of Predatory lending.

    “Irresponsible lending occurs when a lender is unscrupulous with the lending and provides loans inappropriately. For instance, if they do not obtain enough information about income and expenses. If this was the case with your loan, you can make a claim for a refund.”

    GRZ What’s going on?

  19. So, PF regime recklessly borrowd huge loans (debts), most of it fraudulently shared typical of thieves. Failed to service these loans on due dates. Sold these loans – factored to Black Rock . “Black rock had bought these Zambian bonds at rock-bottom prices. PF’s solution was to sell loans to Bondholders at low prices- only an irresponsible government can do this to put its children’s children into bond slavery of paying back the money. Today we have some bloggers phyo,phyo,phyo pay back, pay back- children of thieves inluding KZ.

  20. All this debt is because of the useless PF government which was kicked out by the Zambian people on august 12 last year 2021. PF did more harm to our country than any good. Borrowing is good in order to implement certain projects, but over borrowing is bad. Fun thing is, when they were warned , they said we are lunatics, eish.

  21. It has assets in management of more $10 trillion it’s a global leading Investments firm managing pensionaires and others assets to ensure longevity and Glide paths for it’s members Preserving and investing in that benchmark So it calls for discussion and so clients interest rank first than Zambias The Zambian portifolios of debt in it’s funds has not changed significantly since September 2020 I think the interest is to see Zambia reach debt restructuring discussing with them to achieve that They are open and good for discussion but the disclosures and Economies must show real options in the forward looking sense what options on the Zambia economy in the fiscal plans etc Okay

  22. Saulosi – As usual nothing to offer like that guy in the bar who talks alot when someone else is buying the beers for him!

  23. $3 billions was raised in that we can also do that with local banks to book run and raise the euros if rmb absa ditched bank and HSBC can raise for the south Africa economy why not also here it’s not foreclosure

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