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Looks Like Lusaka Will Miss another Payment

Zambia’s external creditors will have to accept losses as they negotiate debt restructuring and it won’t be possible for the government to secure a bailout from the International Monetary Fund (IMF) before general elections in August. Barclays economists last month forecast creditors including Eurobond holders would exit the restructuring with a 20% haircut, and that’s a reasonable starting point for talks. With fiscal sustainability at stake, the August presidential and parliamentary polls will be important for the country struggling to emerge from its deepest economic slump since 1994 and became Africa’s first pandemic-era default in November after missing an interest payment on a dollar bond. It’s skipped two payments since, while it seeks a funding programme from the IMF. The finance ministry is targeting a deal before the vote, which would form the basis of talks to restructure its commercial debt, but few see that happening. President Edgar Lungu’s cabinet will dissolve along with parliament on May 14, meaning time is extremely short for an agreement.