Creditors Should Cancel Two-Thirds Of Zambia’s Debt, Groups Say

Advocacy groups including the Jubilee Debt Campaign U.K. have called on international lenders to scrap roughly two-thirds of Zambia’s debts in order to help the country reach the requirements for an International Monetary Fund debt restructuring deal. 

According to a study published by the Jubilee Debt Campaign, in association with local activist organisations, Zambia has the capacity to repay between $2.8 billion and $3.5 billion of its debts over the next 14 years. This means roughly $7 billion in debts would need to be written off, resulting in a haircut of between 64% and 71% for private and bilateral lenders.

“Private lenders and other government lent to Zambia at high interest rates and at high risk,” said Alex Muyebe, chairman of the Zambian Civil Society Debt Alliance. “Lenders need to accept they lent recklessly and agree a large-scale debt cancellation to allow the people of Zambia to tackle multiple external crises.”

 Last week, Finance Minister Situmbeko Musokotwane announced the government was aiming to finalise a debt restructuring deal with the IMF in May, having already secured a staff-level deal for a $1.4 billion extended credit facility back in December. 

 However, Zambia still owes external lenders about $17 billion, with more than one-third of that owed to Chinese entities. Jubilee’s calculations did not account for debts owed by Zambian state companies. 

In November 2020 Zambia became the first African country to default on its debts in the pandemic-era. During elections in August last year, President Hakainde Hichilema promised to secure an IMF deal and deliver a transparent and fair debt restructuring programme as a matter of urgency.