Africa

FG Plans Debt Restructuring

Faced with mounting debt servicing obligations, the federal government is planning to push for debt restructuring, Vanguard Media Limited reported. The Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, who gave the indication while featuring on a Nigerian Television Authority, NTA, programme, yesterday, said the current debt servicing obligations were taking too much of the nation’s resources, especially at a time of low revenue generation.

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The G20 summit ended last weekend with a call for “immediate and vigorous measures” to address the effects of the Covid-19 pandemic. Among these is a looming sovereign debt crisis, particularly in Africa, the Financial Times reported in a commentary. Urgent and collective action is needed there to stave off that crisis and to maintain the invaluable social gains that the continent has made. In the early 2000s, multilateral debt relief provided a much needed reprieve for heavily indebted, poor countries around the world. Many African nations took the opportunity.

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Zambia’s state mining arm ZCCM-IH plans to appeal a court ruling in favour of Vedanta , which has sought arbitration in a dispute over its jointly owned copper mine that is facing liquidation, the mining minister said. India-based Vedanta has been locked in a protracted dispute with the Zambian government since May 2019, when Lusaka appointed a liquidator for the mine. “ZCCM-IH has already indicated that they are appealing because they are not happy with the court judgment,” Mining Minister Richard Musukwa told parliament on Thursday. Last week, a Zambian court ordered a halt to liquidation

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Airlines are on course to lose a total $157 billion this year and next, their main global body warned on Tuesday, further downgrading its industry outlook in response to a second wave of coronavirus infections and shutdowns afflicting major markets, Reuters reported. The International Air Transport Association (IATA), which in June had forecast $100 billion in losses for the two-year period, said it now projects a $118.5 billion deficit this year alone, and a further $38.7 billion for 2021.

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A massive increase in projected government debt poses a “major threat” to financial stability in South Africa, the central bank warned on Tuesday, while problem mortgages were also a risk, Reuters reported. South Africa’s government debt is now set to hit 82% of gross domestic product this year as the Treasury grapples with the impact of the COVID-19 pandemic. In its bi-annual review on the soundness of the financial system, the South African Reserve Bank (SARB) said this meant close links between the financial sector and government were now a serious worry.

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Italy will use its forthcoming presidency of the Group of 20 major global economies to try to secure further debt relief for African states, a senior Italian diplomat said on Friday, Reuters reported. Italy takes over the annual rotating presidency of the G20 on Dec. 1 and will look to build on a deal struck by major international creditors in April that was aimed at relieving the world’s poorest nations of debt payments.

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World Bank President David Malpass on Saturday warned G20 leaders that failing to provide more permanent debt relief to some countries now could lead to increased poverty and a repeat of the disorderly defaults seen in the 1980s, Reuters reported. Malpass said he was pleased by progress made by the Group of 20 major economies on increasing debt transparency and providing debt relief to the poorest countries, but more was needed.

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COVID-19 has exposed Kenya’s debt vulnerabilities though official measures including monetary policy easing have helped shield the economy from the impact of the pandemic, the International Monetary Fund (IMF) said late on Friday, Reuters reported. The Fund said it hoped a deal on a new lending facility for Kenya could be presented to its board in early 2021, noting that economic activity in the East African country was starting to pick up despite a drag from sectors such as tourism.

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South Africa could move toward an even deeper junk credit rating this week by losing the only stable outlook on its debt assessments, Bloomberg News reported. Of the 23 respondents in a Bloomberg survey, 12 expect S&P Global Ratings to change its outlook on the country’s credit rating to negative from stable on Friday. That means the next move from the company, which already assesses South Africa’s foreign-currency debt at three levels below investment grade, could be another downgrade. That would take the country to a single B rating and signal an increased probability of a default.

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Zambia is seeking a compromise solution with bondholders and does not expect them to seize its mining assets even though it defaulted on part of its debt last week, Mines Minister Richard Musukwa said on Thursday, Reuters reported. He also said Zambia had no plans to sell its shares in mining companies to raise cash after the country, which is Africa’s no.2 copper producer, failed to pay the $42.5 million coupon on its Eurobond debt on Friday. “We don’t expect Zambia’s assets to be auctioned or taken away,” he told a news conference.

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