Zambia must build majority stakes in selected mines to benefit from its mineral wealth beyond taxes, President Edgar Lungu said on Thursday, as he set out an economic recovery plan after the country defaulted on a debt payment last month, Reuters reported. Africa’s second-biggest copper producer, Zambia is seeking to increase its control over the mining sector - the country’s main generator of hard currency - as it navigates a debt crisis.
Jesuits in Africa are calling on the Catholic Church to press for better repayment terms on debt across the region after Zambia defaulted on a $42.5 million Eurobond coupon in November, America Media reported. The default sparked fears of a regional economic crisis and ripple effects on already struggling Zambians because of increased taxation and curtailed spending on social services, even as health needs increase because of the coronavirus.
Zambian authorities formally requested a financing arrangement from the International Monetary Fund (IMF), the Fund said on Tuesday, to help the southern African copper producer navigate a debt crisis, Reuters reported. Zambia became Africa’s first pandemic-era sovereign default last month after it failed to pay a $42.5 million coupon on one of its Eurobonds. Zambia’s presidency released a photo of President Edgar Lungu meeting with the head of the IMF’s Africa department Abebe Selassie in the capital Lusaka on Tuesday.
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
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.
Zambia finance minister Bwalya Ng’andu said on Wednesday that the country’s default on $3 billion in Eurobonds had increased the risk of bondholders taking legal action, Reuters reported. Zambia became Africa’s first pandemic-era sovereign default after it failed to pay a $42.5 million Eurobond coupon at the expiry of the grace period on Friday. “There are some risks associated with the decision not to pay.
The Zambian government’s lack of engagement has made providing near-term debt relief impossible, a large Eurobond creditor group said, adding it may consider other options with the country looking on track for an acrimonious debt restructuring, Reuters reported. Zambia has become Africa’s first sovereign pandemic-era default after it failed to pay a $42.5 million coupon at the expiry of the grace period on Friday.
The International Monetary Fund on Friday said it was in talks with Zambian authorities about how best to support the country as it heads toward Africa’s first pandemic-era sovereign default, Reuters reported. Any IMF financial support for Zambia would be contingent on steps to restore debt sustainability, an IMF spokeswoman said, underscoring the importance of every stakeholder making an effort to help countries in distress.
Zambia faces a crucial vote that could see it become the first African country to default on sovereign debt payments since the outbreak of the coronavirus was declared a global pandemic almost eight months ago, Bloomberg News reported. Holders of its $3 billion in Eurobonds attending meetings at a law company in London on Friday are expected to reject a government request for a payment holiday after the government last month missed an interest payment on $1 billion of bonds due 2024.
Zambia is doing everything possible to avoid a sovereign debt default later this week, including sharing information on its Chinese debt with holders of its dollar-denominated bonds, its finance minister told Reuters on Monday, Reuters reported. Sources close to the main committee of bondholders, however, said little progress had been made in debt talks. Even before the coronavirus pandemic caused a global economic slowdown, Zambia was struggling with mounting debt due to low prices for copper, its main export.