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The deadline for Zambia to expire on Friday to pay the so-called interest on the $ 42.5 million delayed coupon. The interest rate is applied to one of three bond loans totaling $ 3 billion.
It is now clear that the country will also not be able to handle the payment on Friday, says Finance Minister Bwalya Ng’andu.
The Zambian government has called the lenders to a meeting to ask for a postponement until April of next year. But a group of lenders who own a total of more than 40 percent of Zambia’s bond loans have indicated that they will not accept a longer deferral for the African country.
“Lenders are really upset that Zambia had three years to turn to the International Monetary Fund for help, but they refused to do so because they didn’t want the fund to make tough demands for reform,” said Lutz Roehmeyer, chief investment officer at Capitulum Asset Management. (CAM).
CAM has said it can imagine giving the indebted country a break. But CAM is not part of the large group of lenders who appear to be opposed to the deferral arrangement that Zambia wants.
The Government of Zambia has said that it will do everything in its power to avoid being forced to suspend payments on the national debt. Bwalya Ng’andu announces that negotiations are continuing and hopes that “they will lead to some solution down the road.”
Zambia was grappling with a growing debt problem even before the covid pandemic hit global growth and the country’s economy.
Last year, the country national debt at $ 11.2 billion, equivalent to 48 percent of the country’s gross domestic product. And the International Monetary Fund estimates that the debt burden at the end of 2020–2021 has risen to 70 percent of GDP.
In addition to the bond loans, the debt mountain consists of bilateral loans to Zambia of about $ 3.5 billion and loans from multilateral institutions of SEK 2.1 billion. Debt to China and Chinese lenders totals about 3 billion.
The situation for the Zambian government, which, like many African countries, has suffered significantly higher healthcare costs in the covid pandemic, is exacerbated by the fact that the country’s currency, the kwachan, has fallen by roughly a third. of its value since the turn of the year.
