Zambia Becomes First African Country to Default After COVID-19 Pandemic

Creditors Reject Interest Payment Deferral Request

[Image source=AP Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Zambia has announced that it cannot pay interest on one of its Eurobond bonds, marking the first sovereign default in Africa since the COVID-19 pandemic, Bloomberg reported on the 14th (local time).

The previous day, the $3 billion (approximately 3.3 trillion KRW) Eurobond creditors rejected Zambia government's request to extend the interest payment moratorium by six months.

As a result, the grace period for the $4.25 million (approximately 470 million KRW) coupon payment that was due also ended on the 13th, leading to a default.

Bwalya Ng’andu, Zambia's Minister of Finance, said, "Even after the 30-day grace period ends, we will not pay the Eurobond coupons." He added, "Zambia is suffering from the dual hardships of the COVID-19 pandemic and economic difficulties," and requested, "Please extend the interest payment moratorium until April next year."

He stated, "They (the creditors) do not support or agree to the debt suspension request," and said, "In our precarious position where all creditors must be treated equally, we have no choice but to accumulate arrears."

However, he also added that they hope to find some solution by continuing contact with creditors through advisory groups.

Accordingly, even if creditors do not immediately demand principal repayment, Zambia could be excluded from international capital markets for years.

Creditors argue that since Zambia does not transparently disclose information about Chinese creditors, granting a repayment moratorium only benefits China.

The Chinese creditor group holds more than a quarter of Zambia's external debt. Zambia has been facing massive external debt problems for years, even before the outbreak of COVID-19.

This content was produced with the assistance of AI translation services.