Zambia $18.5 Billion In Debt - Finance Minister

Finance Minister Bwalya Ng’andu has revealed that Zambia’s total debts now stand at US$ 18.5 billion, including continent liability and and debts held by state owned entities. 

Speaking during a call to investors, Dr Ng’andu told bondholders that Zambia’s debt now outstripped its assets at 104% of GDP - far above the IMF and World Bank thresholds of 35%. 

“Zambia is spending half of government revenue collections to service interest on debt currently compared to a few years ago when only 20% of revenues would be channeled towards interest obligations,” the minister said.

The news comes after a difficult conversation between the government and eurobond holders, in which President Lungu asked investors for a six month grace period on debt service repayments. Investors viewed the request as Zambia essentially defaulting on its debts.

Speaking to investors, Dr Ng’andu explained that it had become “increasingly difficult” for Zambia to service its debts, $11.97 billion of which is owed by the government directly. 

Dr Ng’andu said that the coronavirus pandemic had severely impacted Zambia’s economy and made it necessary to apply for debt relief. However, some commentators have argued that Zambia’s debt position was untenable even before the outbreak of the virus, highlighting that Zambia is the only nation in Southern African to default on its debts, despite being no more badly affected by the pandemic than its neighbours. 

The government has said it hopes to reach a debt restructuring agreement with creditors by April, wiping off $1 billion of debt service payments. 

“We have engaged systematically with our official creditors for debt service suspension as well as our commercial creditors to seek similar debt service treatment, including the rescheduling of past due arrears accumulated throughout the year,” Ng’andu said.