The Zambian Finance Ministry has suspended debt service payments to holders of its securities amounting to US$ 3 billion.
The Ministry, prior to the Covid-19 pandemic, issued three sovereign debt instruments; the first being a $750 million debt instrument with a 5.375 per cent interest, the second being $1 billion debt instrument with 8.5 per cent interest and the third being $1.25 billion with 8.97 per cent interest.
The suspension in payments, according to a press release from the Zambian Finance Ministry, will last for six months starting October 14, 2020.
The suspension also covers three upcoming coupon payments due on October 14 this year, January 30 and March 20 next year on the aforementioned debt instruments.
Zambia explains that its inability to service its debt is on the account of “very challenging macroeconomic and fiscal situation aggravated by the Covid-19 crisis that has severely affected the country’s public finances.”
The country says it has suffered a combination of declining revenues and increased unbudgeted costs as a result of the pandemic.
The situation, the Ministry says, has resulted in a material impact on the government’s available resources to make timely payments on its indebtedness leading to debt servicing difficulties.
Meanwhile, the Zambian Government says it is actively engaging with the International Monetary Fund to secure financial assistance within a programme of reforms to help stabilise the country’s economic outlook and restore its fiscal balance.
The Finance Ministry on the back of the suspended debts service payments has invited all holders of its securities to a virtual presentation scheduled to take place on September 29, 2020, at 12:30 pm (London time).