ZAMBIA’S Ministry of Finance announced on Tuesday that over 90 percent of holders of its $3bn in international bonds have accepted its restructuring proposal, paving the way for the country to emerge from a prolonged default.
Zambia defaulted more than three years ago and is restructuring its debt under the G20 Common Framework. This platform brings together creditors like China and the Paris Club to facilitate swift and smooth debt overhauls for low-income countries. Zambia was seen as a test case for this plan, but the process faced delays, hindering investment and economic growth, especially during a devastating drought.
‘Finalising this agreement with bondholders will create the fiscal breathing space necessary for Zambia to remain on a trajectory of sustainable economic growth,’ said Finance Minister Situmbeko Musokotwane in an online statement. ‘After nearly four years since we initially defaulted on our eurobonds, the close of the restructuring chapter is in sight.’
Voting on the proposal ends on May 30, but the government expects the proposal to be approved based on instructions received by May 24. The plan involves swapping three existing instruments due to mature in 2022, 2024, and 2027 into two amortising bonds.
In 2022, Zambia secured a $1.3bn loan from the International Monetary Fund, contingent on restructuring its debt with other creditors. Zambia’s international bonds remained unchanged, with the 2024 bond indicated at 63.4 cents on the dollar and the 2027 maturity at 75.9 cents, according to Tradeweb data.
Spokespersons for the IMF and a group of bondholders did not immediately respond to requests for comment.
About The Author
