By Matthew Hill/Bloomberg
21 March 2021, 07:00 GMT+2
A 20% loss is good starting point, opposition leader says
IMF program, restructuring not possible before August election
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 before general elections in August, the main opposition leader said.
Barclays Plc 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, Hakainde Hichilema, president of the United Party for National Development, said in an interview Thursday.
With fiscal sustainability at stake, the August presidential and Parliamentary polls will be key for the country that’s 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 program 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. Lungu’s cabinet will dissolve along with Parliament on May 14, meaning time is extremely short for any agreement.
Zambia’s Eurobonds are trading at less than two-thirds of face value
“A program before the elections is not feasible,” Hichilema said from Lusaka, Zambia’s capital. “Why would you throw good money after bad, for heaven’s sake? No-one, who is sane, can do that.”