The Zambian President, HakaInde Hichillma, said on Monday, 25th March 2024, that Zambia agreed on a deal to see them restructuring $3 billion of their international bonds.
This report, coming after the East African nation was not able to come up good on her debt via a $1.3 billion loan taken from IMF, is interpreted as excellent, as it allows the country the ability to pay her outstanding debt.
Zambia aims to do a swap deal with their instruments, converting them into amortising bonds, which could see a more significant return value over a period, offering them the chance to pay the old debt.
Of course, this process still depends on the country’s economic situation and ability to deal with the debt in terms of financial planning.
Zambia, who borrowed the loan in 2022, have been steadily reworking the set accrued using the Common Framework, a system designed by G20 and the IMF to allow low and middle-income counties(LMICs) to repay their debts.
However, in the case of Zambia, this process has yet to be smooth. Very long delays have mostly hampered it, and its effect has never reached the local markets.
Furthermore, the nation has been struck by a longstanding drought, which has significantly cut their revenue generation as power supply using hydroelectricity and food production has been severely impacted.
The agreement itself is still in the works, significantly, as some creditors, such as China and France declined it.
The new deal will see investors receive about $3 billion face-value bonds, and bondholders will let go of about $480 million. The government has agreed to the terms of the deal, as with several creditors which include Amia Capital, Amundi, Farallon, Greylock Capital Management, and BlueBay Asset Management.
