BlackRock Urged To Delay Debt Repayments From Zambia

BlackRock, the world’s largest fund manager, has come under pressure to delay its demands for debt interest payments from Zambia, falling in line with some of the country’s other creditors.

The charity Jubilee Debt Campaign said that BlackRock holds $220 million of Zambia’s sovereign bonds but is refusing to reduce the interest rate or delay payments on the bonds like other governments and international agencies that hold the country’s debts.  

BlackRock, which manages some $10 trillion in assets globally, stands to generate $180 million for its clients, mostly in its index-linked exchange-traded funds, if Zambia’s debts are repaid in full.

“This would represent a 110% profit on what we estimate BlackRock paid for the debt,” a spokesperson for the Jubilee Debt Campaign said. 

Since taking office, the New Dawn government has undertaken drastic measures in order to reduce the debts racked up during the previous Patriotic Front regime. This includes cutting government spending and entering into restructuring talks with the IMF and Zambia’s foreign creditors. However, lenders such as BlackRock will need to meet the government half-way if it is to succeed in bringing the country back onto an even financial keel.

Of Zambia’s external debts, 46% is owed to private lenders, 22% to China, 8% to other governments and 18% to multilateral institutions. 

China has already agreed to a longer debt repayment schedule. However, private lenders, including banks, have so far resisted. 

Tim Jones, the Jubilee Debt Campaign’s head of policy, said BlackRock bought Zambian bonds at rock-bottom prices when it was clear the country was already in trouble.

“It is unfair for BlackRock and other lenders to make massive profits out of Zambia’s debt crisis,” he said.

“ If BlackRock refuses to cancel Zambia’s debt, then the UK and other G20 countries should support Zambia to stay in default on BlackRock.”

Isaac Mwaipopo of the Zambia Civil Society Debt Alliance echoed these called, stating, “We urgently need all of Zambia’s lenders, including BlackRock, to agree to cancel debt so we can recover from the Covid pandemic and the economic crisis we face. Loans were given at high interest rates, and have been trading at low prices, so it is only fair lenders agree significant debt cancellation, rather than making mass profit out of the Zambian people.”

Negotiations on debt restructuring are due to take place later this month, with G20 finance ministers convening on 20 April during the IMF spring meetings to discuss the progress of the debt relief scheme known as the common framework.