Zambia must observe risk indicators, advises JCTR
THEcurrent debt crisis Zambia is facing should be a learning point for Government not to ignore indicators of high risk in future, says the Jesuit Centre for Theological Reflection ( JCTR) Executive Director, Alex Muyebe.
Father Muyebe regretted that it was unfortunate that Government choose to ignore indicators of possible default on external debt service obligations.
Zambia’s external debt as at June this year stood at US$11.9 billion.
Father Muyebe said in in Lusaka that there were strong indications that the country was drifting into a debt distress.
“Many stakeholders questioned the capacity of Government to pay back the loans and warned of an impending debt crisis if Zambia continued on trajectory,” he said.
Father Muyebe said Zambia had become the first African country to ask for debt suspension on its Eurobond.
“The Jesuit Centre for Theological Reflection ( JCTR) wishes to remind the nation that Eurobond holders are due to meet on October 20 to vote on the proposal to suspend Zambia’s debt service payments.
“Before then, about US$42.5 million payment on US$1 billion of dollar bonds due in 2024 is scheduled for October 14, 2020 which must be honoured within 30 days before it’s deemed to be in default,” he said.
Less than a month since the Minister of Finance, Dr Bwalya Ng’andu, presented to the same
Parliament the 2021 National Budget Government admitted that there was likely to be default on external debt service if a favourable agreement with creditors would not be reached.
On September 22, this year, Government applied to holders of its US$3 billion in Eurobonds to defer debt service payments for six months while looking at a debt-restructuring strategy.
This period was for the three coupon payments due on October 14, 2020, 30 January, 2021 and 20 March, 2021, on the respective bonds.
Government also asked all creditors for similar relief, after some non-commercial creditors agreed to a payment freeze under the G20 Debt Suspension Service Initiative (DSSI).
China in particular, has given a one-year grace period and rescheduling of three years of repayment amounting to US$225million, US$426.3million and US$428 million for 2020, 2021 and 2022 respectively.