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Tuesday,
September 22, 2020 / 01:17 PM / By Republic of Zambia, Ministry of Finance / Header Image Credit: Lusaka Times
The Ministry of Finance (the "Ministry") of the
Republic of Zambia (the "Republic") has announced a Consent Solicitation to
holders of its (i) U.S.$750,000,000 5.375 per cent. Notes due 2022, (ii)
U.S.$1,000,000,000 8.500 per cent. Notes due 2024 and (iii) U.S.$1,250,000,000
8.970 per cent. Notes due 2027 (the "Notes") to request the suspension of debt
service payments for a period of six months from 14 October 2020, effectively
covering the upcoming three coupon payments due on 14 October 2020, 30 January
2021, and 20 March 2021 on the respective Notes.
The Republic of Zambia is confronted with a very
challenging macroeconomic and fiscal situation aggravated by the COVID-19
crisis that has severely affected the country's public finances. A combination
of declining revenues and increased unbudgeted costs caused by the COVID-19
pandemic have resulted in a material impact on the Government's available
resources to make timely payments on its indebtedness leading to increasing
debt servicing difficulties.
This is the reason why the Republic of Zambia has
taken the decision to apply for the G20 Debt Service Suspension Initiative in
August 2020 and is requesting similar debt service suspension from its
commercial creditors, including its noteholders.
The Government meanwhile continues to actively engage
with the IMF to secure financial assistance within a programme of reforms that
would help in stabilising the macroeconomic outlook of the country and
restoring its fiscal balance. In this context, the Government is committed to
finding a consensual and collaborative resolution to the debt sustainability
issues it is currently facing.
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