Bondholders Demand Details On Debt Relief

A group of Zambia’s international creditors issued a statement on Friday saying the government would need to provide more details on the recently-agreed IMF support package, as well as its own economic plans, if the two sides are to successfully strike a debt relief deal.

The group, which calls itself the Zambia External Bondholder Committee, is made up of international funds that own the country’s now-defaulted bonds. They said it was important that creditors like China, which owns as much as 30% of Zambia’s external debts, provide a similar degree of debt relief.

“Inter-creditor equity should also be of paramount importance in the authorities’ approach to restoring debt sustainability,” the group said on Friday.

“To establish a process in which all parties have confidence, the Committee expects the authorities to engage in simultaneous discussions with the Official Creditor Committee for Zambia and the Bondholder Committee with equality of information disclosure for both groups,” it added.

Last November, Zambia became the first African country to default on its sovereign debts during the pandemic, after years of chronic overborrowing under the previous Patriotic Front government.

After months of negotiations, two weeks ago the new government, led by President Hakainde Hichilema, announced it had struck a deal with the International Monetary Fund for three year extended credit facility worth over $1.4 billion. 

This rescue package was a central promise of Hichilema’s election campaign in August 2021, when he ran on a platform of government reform and fiscal responsibility. 

In November, Hichilema’s government delivered its first budget, slashing government spending and promising to drive down inflation so that ordinary Zambians can put food on the table once more. 

Tackling the debt situation will not be easy, with Zambia owing around $3 billion in international bonds, as well as $2.1 billion to multilateral entities such as the IMF and another $3 billion to China. 

However, investor confidence has grown significantly following the election of President Hichilema. Shortly after his victory was announced, the price of Zambia’s bonds surged – egged on by a rise in the price of Copper: Zambia’s number one export.