ZAMBIA appears headed for a default on debt owed to private investors as a result of financial difficulties aggravated by the coronavirus pandemic.
The southern African country has been heavily indebted but now could get an undesired reputation for financial unreliability if a group of investors who hold $3 billion of the country’s eurobond insist on payments that have come due. Zambia seeks a holiday of six months, but the bondholders’ final decision is pending.
One of the world’s top copper producers, Zambia is a strong example of the debt distress for other governments in Africa even as they try to focus limited resources on urgent problems such as healthcare and education. How Zambia fares will be watched by other nations that owe large amounts not just to private bondholders but also to commercial banks and state lenders such as China.
A debt moratorium granted by G20 countries in response to the pandemic that freed up to $20 billion for low-income nations ends in late December, and African governments seek an extension to free up further resources to fight the COVID-19 pandemic and help battered economies.A default on private debt is damaging in the eyes of investors, and credit rating agency Fitch downgraded Zambia to almost junk status after the government sought to delay interest payments to bondholders in Septembe