2023-11-11 13:04:00
(Ecofin Agency) – The G20 common framework on debt treatment stipulates that private creditors must participate in the restructuring of the debt of low-income countries, under conditions comparable to those of official creditors.
Zambia’s official creditors and the International Monetary Fund have issued ” reserves » on the agreement in principle concluded between Lusaka and the holders of its Eurobonds on the restructuring of more than 3 billion USD of debts, announced the Zambian Ministry of Finance in a press release published Friday, November 10.
« Zambia and the bondholder group’s steering committee continue negotiations following the official committee of creditors and the IMF expressed reservations regarding the agreement in principle during discussions held in recent days » reads, without further details on the nature of these reservations.
In accordance with the provisions of the G20 common framework on debt treatment, private creditors must participate in the debt restructuring of low-income countries on terms comparable to those of official creditors. The agreement in principle between the Zambian government and private creditors provides for the issuance of new Eurobonds which will mature in 2035 and 2053, with a total value of USD 3.135 billion, more than the nominal value of the current outstanding Zambian Eurobonds.
This agreement in principle was concluded at the end of last October, less than 2 weeks following the signing of an agreement between Lusaka and its official creditors on the restructuring of 6.3 billion USD in debt. In addition to extending loan maturities by approximately 20 years with a grace period of 3 years, the agreement provides for reductions in interest rates.
In default of payment since 2020, Zambia requested in February 2021 the restructuring of its external debt of around 13 billion USD, as part of the initiative proposed by the G20 to the poorest countries. But the negotiations dragged on, notably due to disagreements between Western countries which have traditionally led the debt restructuring processes of developing countries, and China which is now the largest bilateral creditor in the world.
Also read:
26/10/2023 – Debt restructuring: Zambia concludes an agreement in principle with the holders of its Eurobonds
16/10/2023 – Zambia signed an agreement with its official creditors on the restructuring of $6.3 billion in debt
06/10/2023 – Zambia begins negotiations with its private creditors on the restructuring of more than $3 billion in debt
06/14/2023 – IMF expects agreement on Zambia’s debt restructuring “in the coming weeks”
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