Learn from mistakes, govt urged

BUUMBA CHIMBULU writes@SunZambianTHE current debt crisis Zambia is facing should be a learning point for Government not to ignore indicators of high risk in future, says the Jesuit Centre for Theological Reflection (JCTR) Executive Director, Alex Muyebe.Father Muyebe regretted that it was unfortunate that Government chose to ignore all Indicators of possible default on external debt service obligations.Zambia’s external debt as at June this year stood at US$11.9 billion.Father Muyebe said in a statement issued in Lusaka recently that this was on the basis of strong indications that the country was drifting into a debt distress.“Many stakeholders questioned the capacity of Government to pay back the loans and warned of an impending debt crisis if Zambia continued on the same trajectory,” he said.Father Muyebe said Zambia had become the first African country to ask for debt suspension on its Eurobond.“The Jesuit Centre for Theological Reflection (JCTR) wishes to remind the nation that Eurobond holders are due to meet on October 20 to vote on the proposal to suspend Zambia’s debt service payments.“Before then, about US$42.5 million payment on US$1 billion of dollar bonds due in 2024 is scheduled for October 14, 2020 which must be honoured within 30 days before it’s deemed to be in default,” he said.Less than a month since the Minister of Finance, Dr Bwalya Ng’andu presented to Parliament the 2021 National Budget; Government has admitted that it will likely default on external debt service if a favourable agreement with creditors is not reached.On September 22, 2020, Government applied to holders of its US$3 billion in Eurobonds to defer debt service payments for six months while it works on a debt-restructuring strategy.This period covers the upcoming three coupon payments due on October 14, 2020, 30 January, 2021 and 20 March, 2021, on the respective bonds.Government has also asked all creditors for similar relief, after some non-commercial creditors agreed to a payment freeze under the G20 Debt Suspension Service Initiative (DSSI).China in particular, has given a one-year grace period and suspension and rescheduling of three years of repayment amounting to US$225million, US$426.3million and US$428 million for 2020, 2021 and 2022 respectively. The Sun