Zambia aims to clinch debt restructuring deal by April - finance minister

Zambia hopes to reach a debt restructuring agreement with creditors by April and hopes to get nearly $1 billion of debt service relief from its requests to official and commercial creditors, Finance Minister Bwalya Ng’andu said on Tuesday. One of the world's largest copper producers, Zambia had been wrestling with growing public debt even before the coronavirus outbreak forced lockdowns around the world and cut demand for raw materials.

Zambia hopes to reach a debt restructuring agreement with creditors by April and hopes to get nearly $1 billion of debt service relief from its requests to official and commercial creditors, Finance Minister Bwalya Ng’andu said on Tuesday.

One of the world's largest copper producers, Zambia had been wrestling with growing public debt even before the coronavirus outbreak forced lockdowns around the world and cut demand for raw materials. "We have engaged systematically with our official creditors for debt service suspension as well as our commercial creditors to seek similar debt service treatment, including the rescheduling of past due arrears accumulated throughout the year," Ng'andu told creditors in a webcast.

"We hope to be in a position to reach an agreement in principle with our external creditor community on a debt treatment and with the IMF on a staff level agreement for a programme by the end of the standstill period." Last week, Zambia launched a vote with its Eurobond holders, proposing to defer interest payments on its three outstanding dollar-denominated bonds in a standstill period until April 14, 2021.

The minister added that assuming all debt service suspensions were granted and included arrears, relief would amount to $81 million under the Debt Service Suspension Initiative (DSSI) and to $897 million on commercial claims. Zambia external public debt burden amounts to nearly $12 billion with $3 billion outstanding Eurobonds, $3.5 billion of bilateral debt, $2.9 billion of other commercial debt and $2.1 billion owed to multilaterals. Some $3 billion of public debt is owed to China.

Investors watching the presentation said they welcomed Ng’andu's commitment to "fair and equitable" treatment for all creditors, but were disappointed about the lack of detail on the status of talks with China or debt owed by state-owned power company Zesco. Dollar bonds fell by around 1 cent in the dollar with many bonds trading at just over 50 cents in the dollar, their lowest in more than two months.

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