Lenders urged to cancel Zambia debt as country faces economic collapse
More than 100 economists and academics have urged international lenders to crisis-stricken Zambia to write off a significant slice of their loans during financial restructuring talks this month.
Zambia is seeking up to $8.4bn (£7.3bn) in debt relief from major lenders,including private funds run by the world’s largest investment manager, BlackRock, to help put its public finances back in order.
In the run-up to what are understood to be tense negotiations involving the Chinese, French and British governments, the anti-poverty charity Debt Justice said that only a major debt write-off could save the Zambian economy from complete collapse.
Led by the Columbia University economist, Jeffrey Sachs, and Jayati Ghosh, the chair of the Centre for Economic Studies at Jawaharlal Nehru University, the 100-plus global group of economists and experts said in a letter to the creditors’ negotiating committee that Zambia should be given a waiver from debt interest payments due until 2023.
Earlier this month, the International Monetary Fund (IMF) approved a $1.3bn loan to the country, which defaulted on its $17.3bn of external debt after a collapse in its public finances during the pandemic.
Funds run by BlackRock are among the largest private owners of Zambia’s bonds, holding $220m. Some are worth almost half the value they were sold at. Eurobonds worth $1bn that mature in 2024 plunged 6.3% in the last week to less than 56% of their face value.
Debt Justice, formerly known as the Jubilee Debt Campaign, has estimated that BlackRock could make 110% profit for itself and its clients from Zambia if debt interest payments are paid in full. The country has three main private sector bonds that pay an average 8.1% in interest.
The letter said:
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