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Agreement with bondholders to provide Zambia with $2.5bn in cash flow relief —Finance Minister


Bondholders will provide approximately US$2.5 billion in cash flow relief to Zambia through reduced debt service payments following the agreement to restructure the existing debt between the two parties.

This would be provided during the International Monetary Fund (IMF) programme period.

Finance and National Minister, Situmbeko Musokotwane, said this when delivering a speech on the restructured debt in Parliament on Wednesday.

Under this agreement, the bondholders would also forego approximately US$840 million of their claims through a haircut on the outstanding balance on the bonds and accrued interest.

Read more: Chamber of commerce hopes Zambia’s deal with Eurobond holders will unlock resources for development

“The portion of external debt which is subject to restructuring comprises official bilateral debt which accounts for approximately 50 percent. Commercial debt accounts for the other half, out of which Eurobonds also account for over 50 percent.

“Therefore, the agreements reached with the Official Creditor Committee (OCC) and the Bondholders imply that out of the debt which is subject to restructuring, about 75 percent percent has been restructured, leaving only the debt owed to other commercial creditors,” Musokotwane said.

He noted that the implication of the agreement with the bondholders and OCC was that government would resume making debt service payments on the restructured debt.

This, he explained, required funds to be made available in the budget to meet the obligations falling.

“We will continue engaging other commercial creditors on a Non-Disclosure basis, with the determination of getting debt treatments on terms comparable to what has been agreed with both the OCC and the Bondholders,” Musokotwane said.

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