Jump to navigation


Debt deal teeters on the brink of collapse

G20 creditor committee rejects revised Zambia agreement, potentially deterring other countries from applying and putting the relief programme at risk

The threats to Zambia's painstakingly agreed debt restructuring deal could be the last nail in the coffin on the Group of 20's Common Framework debt relief programme.

Last week's decision by the Official Creditors Committee to reject a revised deal on the grounds that it breached the 'comparability of treatment principle' – where no creditor should receive more favourable treatment than the others – and did not provide enough debt relief has sent the government in Lusaka and bondholders back to the drawing board.

'The OCC is inexplicably blocking the path to restoring Zambia's debt sustainability by dictating terms it has no right to define,' said bondholders in a statement, adding that 'the OCC's intransigence risks inflicting severe damage to Zambia's economy and poses an existential threat to the entire viability of the Common Framework, impacting the emerging markets asset class.'

The bondholders were set to take a bigger upfront haircut than China – Zambia's largest bilateral creditor – which has agreed to restructure $4.1 billion.

Finance Minister Situmbeko Musokotwane has complained that the delays have hit economic growth, weighed on local financial markets and increased the cost of living.

Praising President Hakainde Hichilema's government for its role in brokering the agreement, the International Monetary Fund had previously said it would use the deal as a template for other nations such as Ethiopia and Ghana that are also seeking debt restructuring under the G20's Common Framework.

However, no country has brokered a debt relief deal based on the G20 programme since its creation in 2020, and Zambia's travails are likely to further discourage other debt-distressed African countries from following Lusaka's path.

Related Articles

A bridge 100 metres too far

Zimbabwe failed to invest in a key trade link over the Zambezi and now that truckers are using it to avoid the country altogether, Harare wants back in

Botswana's President Mokgweetsi Masisi is happy to call himself one of Zimbabwean President Emmerson Mnangagwa few friends abroad. Masisi has been outspoken in calling for western ...

High expectations of HH

The new president is sending all the right signals but needs to move fast to avoid disappointing voters and investors

President Hakainde Hichilema's record of early appointments and dismissals shows he is making good on his promise of a new start for governance and the economy, Lusaka pundits say,...

Lusaka welcomes Asia, again

President Michael Sata tries to balance Chinese investors’ interests and his populist policies

The former scourge of Chinese investors, President Michael Chilufya Sata, has reshuffled his Patriotic Front government to placate Asian and other investors and to streamline econo...

Jobs on the roads

President Michael Sata’s promise to reduce mass employment is yet to be fulfilled. Although he has raised the necessary finance, public institutions are having trouble translating ...

Lungu against the law

The President may be comfortably installed in State House but he is not easing up on institutions which get in his way

The latest public body to feel President Edgar Lungu's enmity is the judiciary, which has been granting petitions to nullify some constituencies' results in the 16 August polls. Op...