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Saturday, October 24, 2020

Zambia’s debt crisis worsens as creditors refuse to grant relief

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Zambia is going to be the first African country this year to default on part of its debt, or if it’ll get the repayment reprieve it’s been asking for.

Zambia's debt crisis worsens as creditors refuse to grant relief www.theafricanstand.com
Zambia’s President Edgar Lungu shakes hands with China’s President Xi Jinping before their bilateral meeting at the Great Hall of the People on September 1, 2018. Nicolas ASFOURI / POOL / AFP


(African Stand) — Zambia’s debt situation seems to be deepening with some commercial creditors “refusing” to grant it some relief it was seeking to ease the pressure, the country’s Parliament heard late Thursday.

“Although we have obtained some relief under the debt service suspension initiative (DSSI) window, particularly from official creditors, engagements with commercial creditors, have not yet yielded the expected results. This is because these creditors were concerned that we were not treating all creditors equally,” Finance Bwalya Ng’andu told the house in a statement.

The government seemed to be discriminatory in the treatment of creditors as are servicing certain categories of our debt while not servicing others, he said.

Concern was raised that the Eurobond debt was not included in the request and that Zambia had continued to service all Eurobond payments when they fell due while allowing the accumulation of arrears on other portfolios.

Dr. Ng’andu said the exclusion of Eurobond payments from the DSSI request also made some creditors reluctant to grant it as they were concerned that the debt relief they would provide would be used to pay debt service to other creditors and not be channeled towards covid-19 related expenditures as intended.

He also said the “stock of external debt as at end 2019 was at $11.97 billion but added that with the guaranteed debt for state-owned enterprises came to $13.55 billion.

“I have noted, regrettably, that some sections of the domestic and international society, that may not have read the recently released 2021 international debt statistics report by the World Bank, are quoting government debt as being $27.34 billion as opposed to $11.48 billion at end 2019,” he said.

The amount stated in the World Bank report refers to the total national debt that includes private sector external debt of $15.57 billion.

Zambia has been engaging its creditors to seek their approval for suspension of debt service payments for a period of six months in accordance with the terms of the G20 and Paris Club debt service suspension initiative.

Local media quoted Zambia President Edgar Lungu saying the country’s debt situation was giving him “sleepless nights”.

The opposition and civil society have made it a moot point ahead of the 2021 general election.

The incumbent regime borrowed heavily to spend on infrastructure and at times to pay civil servants.

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