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Zambia Becomes the First African Country to Default on its Debts

This has led to fears that a “debt tsunami” could engulf the continent’s most heavily indebted nations as the financial impact of coronavirus hits. A hastily-arranged G20 finance minister meeting in Saudi Arabia failed to sort out Zambia’s debt, after the southern African country missed a $42.5m coupon payment on its bonds in October. Missing another payment on 14 November meant a technical default. Zambia’s finance minister, Bwalya Ng’andu, was quick to blame the banks and asset and fund managers who wanted to see more transparency over an estimated $3bn debt to China, but who refused to sign the necessary confidentiality agreements, he said. The Zambia External Bondholder Committee, a consortium of lenders that own 40% of Zambia’s outstanding Eurobonds, said in a statement they had had no direct discussions with authorities. As a result, the “lack of engagement and transparency does not provide for the conditions that would otherwise allow bondholders to consider providing near-term relief”, they said. Other organisations, including the International Monetary Fund (IMF) and World Bank, have said Zambia has taken on more debt than it could handle. Even before the pandemic, Zambia was due to pay $1.7bn to service its debts this year – equating to more than 8% of the country’s GDP for 2020.