Zambia to default on debt owed private investors

LUSAKA, ZAMBIA — Zambia’s government said it would miss a Friday deadline to clear debt owed to external investors who rejected the country’s request for deferral of an overdue $42.5-million (U.S.) interest payment.

The southern African country had to pay up by Saturday to avoid becoming the first African nation to default amid the coronavirus pandemic after repeatedly failing to win a sixmonth holiday from eurobond holders who account for about $3 billion of Zambia’s sovereign debt.

“The position of government is that we have to treat all creditors equally,” Finance Minister Bwalya Ng’andu told journalists. “Pari passu principle is the principle that we are operating on because you probably know that the bondholders only consist part of the entire debt stock … We require that all of them are treated fairly and equally, because if we don’t do that, we create an environment that is somewhat hostile.”

A group of private creditors earlier on Friday had rejected Zambia’s request for a holiday until April. In a statement, the government said it remained “committed to finding a consensual and collaborative resolution to debt sustainability issues” despite the decision of the creditors.

Many sub-saharan African countries, from Cameroon to Kenya, have issued eurobonds over the years, amassing debt that is maturing at a time of rising financial burden amid the pandemic.

Zambia, one of the world’s top producers of copper, would become the first African sovereign to default during the pandemic.