Zambia’s debt crisis makes international Headlines as country risks becoming the first junk economy in Africa
Written by Mafken FM Newsroom on 15 November 2020
Zambia has raised international Headlines after Bond holders refused on Friday to defer the country’s debt service payments for six months.
This development risks seeing the country being classified as a junk economy the first in Africa after COVID 19 if the Zambia fails to honor its obligations.
On 14th October, 2020 Zambia missed paying its coupon of 42 point 5 million on 1 billion dollars of dollar bonds due in 2024.
Zambia was then given a 30-day grace period for coupon payment which expired on Friday 13th November.
Now that Zambia’s Eurobond holders have rejected Government’s request for a six months interest payment freeze, a sovereign debt default has been triggered as Zambia is unable to meet the coupon payment obligations because of its constrained fiscal space.
The Government had requested interest payment holiday because it was very clear that it has no resources to meet the payment obligations as they become due either now or in the following months. National budgetary allocation to the social sector has been declining in the last five years. The British Broadcasting Corporation BBC and other International media houses have been following the situation in Zambia.
