Tuesday, June 25

Zambia’s three-year financial obligation restructuring takes advance

By Marc Jones and Rachel Savage

LONDON/JOHANNESBURG (Reuters) – Zambia reached a financial obligation restructuring deal-in-principle with its worldwide shareholders on Monday, bringing the southern African nation near ending up a complicated procedure that has actually lasted more than 3 years and been beleaguered by various hold-ups.

Below is a condensed timeline of crucial occasions:

2019-2020: Zambia dealt with difficulties in repaying its financial obligations, including its worldwide dollar-denominated federal government bonds referred to as “Eurobonds”.

May 2020: Zambian President Edgar Lungu’s federal government works with French company Lazard (NYSE:-RRB- to encourage on reorganizing the cash-strapped southern African country’s foreign financial obligations, then formally stated to be $11 billion.

June 2020: The nation demands to have its financial obligation payments frozen under the G20-led Debt Service Suspension Initiative (DSSI), which was developed in action to COVID-19.

November 2020: Zambia misses out on a $42.5 million payment on among its worldwide bonds, making it Africa’s very first pandemic-era sovereign default.

February 2021: Lungu’s federal government demands a financial obligation restructuring under the G20’s Common Framework, a procedure likewise established in reaction to COVID-19.

August 2021: Opposition leader Hakainde Hichilema protects a landslide triumph over Lungu in a governmental election.

October 2021: Zambia’s financing ministry states its external financial obligation was practically $17 billion on June 30, 2021, with financial obligations to Chinese loan providers practically two times the previous authorities figure.

June 2022: Governments that have actually provided to Zambia form an “main sector” financial institution committee (OCC) to officially begin reorganizing their loans to the nation.

July 2022: Zambia’s OCC, co-chaired by China and France, dedicate to giving the nation financial obligation relief, leading the way for the International Monetary Fund to authorize a $1.3 billion, three-year rescue loan.

June 2023: The OCC consents to reorganize its combined $6.3 billion worth of loans to Zambia.

Simply over $4 billion of that cash is owed to the Export-Import Bank of China, highlighting the value of Beijing’s assistance for the offer.

October 2023: The federal government reaches an “contract in concept” with a group of global financial investment and pension funds that hold $3 billion worth of its sovereign bonds that it had actually offered on the worldwide capital markets.

The offer proposes combining that financial obligation into 2 bonds with much easier terms and longer payment due dates, however likewise extra quicker payments if the nation’s economy succeeds.

November 2023: The offer suffers a significant blow after the federal government states that its bilateral “OCC” lenders had actually banned a modified handle its shareholders on the premises that it still does not supply sufficient financial obligation relief.

Angry shareholders state the OCC is requiring financial obligation remedy for them that is materially greater than either Zambia’s federal government or the IMF consider required.

January 2024: Zambian authorities take a trip to China for financial obligation talks with its Chinese financial institutions, consisting of the Export-Import Bank of China and industrial banks.

February 2024: Zambia’s President states India and China have actually signed restructuring arrangements,

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