Derivative committee asked to rule on Zambia’s failure to pay sovereign debt

Derivative committee asked to rule on Zambia’s failure to pay sovereign debt

Derivatives committee asked to rule on Zambia debt non-payment (Reuters)
Last Modified: 03:55 AM, Tue Nov 17, 2020
17 November 2020
Word Count: 134

LONDON, Nov 17 (Reuters) – A credit derivatives committee has been asked to rule whether a ‘failure to pay’ credit event has been triggered by Zambia, paving the way for a potential payout for holders of default insurance on the country’s sovereign debt.

The EMEA Credit Derivatives Determinations Committee was asked the question after the government failed to pay a $42.5 million coupon at the expiry of the grace period on Friday, according to a post on its website on Monday.

Confirmation of a ‘failure to pay’ credit event would move holders of default insurance on Zambia’s sovereign debt closer to collecting payouts.

Credit default swaps (CDS) allow investors to insure the bonds they own against default and can also be used to bet against a particular sovereign’s debt. (Reporting by Tom Arnold; Editing by Catherine Evans)


By: Anthony Bwalya

I am a Zambian and I want the best for my country and its people.

We are all saddened by the irresponsible, diabolical culture of public finance mismanagement by and under the PF regime since they took power in 2011. The failure of the PF to manage public debt sensibly will harm a lot of people in this country for the next 30 years at least.

I can also understand why some quarters are now actively peddling the narrative that there should be some debt cancellation of Zambia’s debt, because it is now abundantly clear that the PF regime had, and still have zero plan of repaying this debt and that they have effectively placed this country under auction.

I take a different view:

There should be NO debt cancellation UNTIL we do the following:

1. Change government

Debt does not accumulate itself. The PF have been borrowing to steal other people’s money. Just like HIPC debt cancellation was delivered under strict conditions, you cannot forgive debt and allow a bunch of thieves more latitude to continue stealing.

We need to deliver a new culture of political leadership under a different breed of politicians, not the current garbage.

2. Isolate legal debt from illegal debt

We all know that all debt post 2016 was contracted without Parliamentary approval, contrary to Articles 63,114 and 207 of the Republican Constitution.

It will be irresponsible to call for the cancellation of illegal debt, because we will be making Zambians and the Zambian Republic accessories to crimes of and by the PF.

Let all illegal debt be the primary responsibility of the individual government officials responsible for contracting it, and then we can have constructive discussions around resolving the legal portion of the public debt.

3. Transparency around who we owe, how much and the collateral conditions

If the PF insist that ALL debt has been contracted on behalf of Zambians, surely Zambians deserve to know who is owed how much and the COLLATERAL CONDITIONS around each obligation, particularly Chinese loans.

If we shall blindly get onto the bandwagon of “debt cancellation” without demanding absolute accountability from the PF, then we do not deserve this country; and it will make all of us accomplices and accessories to the economic crimes committed by the PF regime against our country.


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