Long delays in Zambia’s debt restructuring have hamstrung much needed investments, curtailed economic growth, weighed on local financial markets and added to living costs for its people, Finance Minister Situmbeko Musokotwane told Reuters.
Zambia defaulted three years ago and is trying to rework its debt under the G20 Common Framework, a programme designed to ensure swift and smooth debt overhauls for low-income nations.
But the process has been beset by delays, with Zambia suffering a major setback on Monday when official creditors rejected a preliminary deal agreed between the country and its bondholders to rework $3 billion over objections on whether it offered comparable debt relief.
The first African country to default in the COVID-19 era, Zambia’s debt restructuring had started with drawn-out negotiations with bilateral creditors including China.
“Zambia’s debt restructuring has dragged on too long,” Musokotwane said in emailed comments.
“During restructuring, we are experiencing vastly constrained fiscal space. We cannot attract vital foreign direct investment. We have no access to capital markets.”
Uncertainty or negative news on the restructuring progress have hit domestic bond markets, Musokotwane said, which may affect the government’s ability to fully finance the national budget.
Source: Devdiscourse
