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Next Africa: Zambia Is Focus of Global Debt Crisis - BLOOMBERG
By Antony Sguazzin
Zambia is in the global spotlight for all the wrong reasons.
The southern African nation skipped a coupon instalment on its Eurobonds this week, increasing the likelihood of a debt default. The government has called on private creditors to agree to a deferral of payments at an Oct. 20 meeting, but many are reluctant to comply.
The country is now a test case for how the international community will treat nations that can’t meet their commercial debt obligations, even if it's a result of the Covid-19 pandemic. Countries from Africa to Latin America and beyond are facing similar struggles, leaving them at the mercy of lenders trying to get their money back.
Zambia's creditors want the government to sign up to an International Monetary Fund plan, but the institution would no doubt want transparency on arrangements with loans from China that make up as much as a third of the debt. There’s also an election in 10 months time, making the government reluctant to curb spending.
The G-20 group of the world’s richest nations this week extended debt relief until the end of June 2021 and chided private creditors for not joining the program. China, the biggest lender to many African nations, is yet to fully commit.
Zambia is finding that balancing the interest of its private creditors with those of its development partners is difficult. Lenders may have to accept some losses and China could come under more pressure to make its intentions known.
News & Opinion
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Past & Prologue
Data Watch
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Last Word
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