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Zambia’s Creditors Should Cancel Two-Thirds of Debt, Groups Say

Zambia’s creditors would have to take losses of about two-thirds if the country is to meet the International Monetary Fund’s requirements for a debt restructuring, according to a study by groups advocating for debt forgiveness.
Zambia’s Creditors Should Cancel Two-Thirds of Debt, Groups Say Vendors wait for customers on a sidewalk in the central Lusaka Business district on November 12, 2014. Photographer: Gianluigi Guercia/AFP/Getty Images
Bloomberg
By Bloomberg
4 Feb 2022
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The Southern African nation, which became the continent’s first pandemic-era defaulter in 2020, has capacity to repay about between $2.8 billion and $3.5 billion of debt over the next 14 years. About $7 billion would have to be written off, implying a haircut of between 64% and 71% for private and bilateral lenders, according to the study published on Friday by an alliance of local activist organizations and the Jubilee Debt Campaign U.K.

“Private lenders and other governments lent to Zambia at high interest rates and at high risk,” Alex Muyebe, chairman of the Zambian Civil Society Debt Alliance, said in an emailed statement.  “Lenders need to accept they lent recklessly and agree a large-scale debt cancellation to allow the people of Zambia to tackle multiple external crises.”

Zambia needs to secure an IMF economic program to complete a debt restructuring under the Group of 20’s Common Framework for debt treatment. The nation owes external lenders about $17 billion, including debts of its state-owned companies, with more than one-third of that owed to Chinese entities, according to the Zambian finance ministry. Jubilee doesn’t include state companies in its calculations.

President Hakainde Hichilema, who won power in August, has pledged to secure an IMF program and complete a transparent and fair debt restructuring as a priority.

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