Impending Rejection Of Relief By Zambia’s Creditors Likely To Worsen Economic Recession
By Michael Kaluba
Financial Analyst Maambo Hamaundu says the impending rejection of relief by Zambia’s creditors has the potential to plunge the nation into further financial and economic turmoil as the country will lack creditors to lend it money.
He says this may lead to an escalation of the cost of borrowing and difficulties to auction treasury bills among other fiscal challenges.
Mr. Hamaundu tells phoenix news that if Zambia defaults on its external debt, it will paint a gloomy picture and stress the country’s international debt portfolio especially that the borrowed money has not been used prudently.
He has predicted tougher times ahead for ordinary Zambians as the local economy is at its lowest, high cost of living and possible default on debt after missing payment of a $42.5 million coupon on one of its Eurobonds last month with the 30-day grace period expiring on Friday.
According to a key bondholder group who hold about 40% of Zambia’s $3 billion of outstanding dollar bonds, and at least 25% of each, it is set to reject Zambia’s request for an interest-payment holiday, putting the country on course to become the first African sovereign defaulter since the onset of the coronavirus pandemic.
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