The landlocked East African country of Zambia has failed to get its private creditors to agree to its request for a repayment moratorium. Zambia has been one of the many countries that have defaulted on international bonds in recent years. The International Monetary Fund is uneasy about Africa’s mounting debt, and several African countries may soon default on their debts.
The situation in Zambia has not gone unnoticed in the financial world, according to our own RFI French Saturday (October 03, 2020), when on Tuesday, September 29, private creditors rejected Zambia’s request for a six-month delay in interest payments on international bonds. An international bond, as its name suggests, is a bond offered on the financial market, a financial product that is difficult to reschedule because the creditor is a bank or an investment fund, or sometimes even an intermediary, and unlike a public debt, it is not the state that is behind the move to benefit the borrower.
The IMF issues an early warning
Over the past decade or so, issuing international bonds has become a fashionable practice for African leaders and many countries currently experiencing situations like that of Zambia. The collapse of Lusaka is being closely tracked by all parties. Even more troubling, the current crisis threatens to trigger a chain reaction of debt defaults.
The International Monetary Fund issued an early warning on Thursday. Private creditors, as well as China, have been called upon to take action to alleviate the debt of poor countries, in line with the practices of the Group of Seven (G7). IMF executives note that the problem is getting worse as it drags on.
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