Debt Justice reaction to Zambia agreement with bondholders

The steering committee for Zambia’s bondholders and the Zambian government have announced they have reached an agreement to restructure Zambia’s debt, which has been accepted by public sector creditors.

Reacting to the announcement Tim Jones, Head of Policy at Debt Justice, said:
“Today’s deal is better than the first bondholder proposal that was rejected by creditor governments in October. But bondholders will still get paid back over 10% more than public creditors. Taxpayers around the world, from the UK to China, are subsidising private sector profit. Legislation is needed in the UK and New York to ensure private lenders give as much debt relief as the public sector.”

Tim Jones continued:
“This deal still needs to be agreed with all bondholders, and there is a further $1.5 billion owed to Western banks and financiers in other forms of debt. Pressure is urgently needed on these creditors to agree to debt relief.

“If the IMF and World Bank make minor changes in their assessment of global growth or Zambia’s economy, the people of Zambia will end up paying far more under the enhanced deals for creditors. Yet there is no automatic mechanism to reduce debt payments if circumstances are worse than expected. This is a major weakness of the deals which could lead to the need for more debt relief in the future.”