Bondholders Demand Answers Over $575 Million PF Loan

Zambia’s bondholders have demanded answers over an apparent ‘ghost loan’ of over half a billion US dollars taken out by the PF government between December 2019 and January 2020. The government is refusing to tell its creditors from whom it borrowed the money and what purpose it might be used for. 

Some observers have speculated that the loan might be used by the PF to ‘buy’ MPs’ votes for Constitutional Amendment Bill 10 - due to be reintroduced to the National Assembly this month - while others believe the funds are being used to train militia. 

The news follows a meeting between the Zambian government and its creditors early last month, in which the government asked for a six month moratorium on interest payments. At a meeting on Tuesday creditors failed to reach quorum on the matter, delaying the vote until November 13th at which point Zambia will officially enter into default. 

Bondholders have been reluctant to grant Zambia a break on interest payments, believing that the government will simply use the extra cash to service its debts to China. 

As one major bondholder put it: “We have no visibility on the use of proceeds if we agree to a debt standstill”.