Government Sets Up Sinking Fund to Avoid Defaulting on Debt
The Government has set aside US$ 10 million in preparation to service over US$3 billion in debt secured in Eurobonds from foreign capital markets. The Eurobonds were secured for ‘infrastructure development’ and their due dates commence in the next three years.
It has sparked fresh concerns over Zambia’s continued relationship with China which is coming at the expense of relations with donors in the West, including the IMF.
Finance Minister Mwanakatwe has confirmed that the government owes local and external debtors in excess of US$17 billion, of which 30% are Chinese loans.
Many are concerned Zambia will default on its debt, however Minister Mwanakatwe has tried to reassure the international community by stating;
"I want to state categorically that the PF (Patriotic Front) government has not and will not default on any of its external debt. We will ensure that every month when it's time to pay the debt, we will pay. When it's time to pay the Eurobond bond we will pay,"
The Centre for Trade and Policy Development (CTPD) and the Economist Intelligence Unit (EIU) are among critics that argue that Zambia risked defaulting on the impending Euro bond repayment in the next three years, claiming that relations with creditors were on the wane because of the increased debt portfolio.