UA-55300619-1

Mwanakatwe tries to calm fears over Eurobond debt

Filed under: Business,Latest News |
1,667 Views

Margaret Mwanakatwe

Finance Minister Margaret Mwanakatwe has attempted to ‘sweet talk’ Zambians into believing that President Edgar Lungu’s appeal to Turkish President Recep Tayyip Erdoğan to help the country repay it’s $750 million Eurobond is no cause for concern.

During Erdoğan’s stopover visit to Zambia on Saturday, President Lungu told his Turkish counterpart that he was aware that a Turkish company had shown interest in buying of the $750 million Eurobond – which is about to fall due – and begged him to facilitate the deal on his government’s behalf.

“We have information that a Turkish firm has offered to help Zambia repay the loan. We urge you, your excellence to encourage the firm to come to our aid,” President Lungu said.

The Head of State’s comment has raised widespread concern among citizens but Mwanakatwe has sought to allay those fears by claiming that President Lungu’s statement is not “a signal of failure” to repay the Eurobonds liabilities.

“Government wishes to shed more light on the statement made by the President of the Republic of Zambia, Mr. Edgar Chagwa Lungu regarding a Turkish Company that is being courted on refinancing the 2022 Eurobond. Whilst we are open to discussing financing of the Eurobonds to achieve lower costs and longer maturities with potential investors, this exercise will be done in full consultation with the bond holders and in accordance with international market standards. If the offer from Turkey crystallises, no unilateral action will be taken by the Government. We stand by the commitments made to bond purchasers’ at the time of issuance of the Eurobonds not to take any action without consulting holders of Zambia’s Bonds.” She said.

Mwanakatwe added that she will lead a high-level mission to China in August this year to hold strategic consultations with Chinese authorities, financial institutions and companies doing business in Zambia to discuss the debt restructuring programme.

“As directed by The Republican President, we are proactively undertaking a rigorous Asset/liability management exercise. Specifically, the Government is advanced in preparing for discussions with the Government of the People’s Republic of China to refinance portions of the Chinese debt, particularly those with a medium-term maturity profile. This will ultimately create positive and smooth cash flows. A high-level mission will travel to China in August 2018 to firm-up the discussions in order to create positive and smooth cash flows,” She said.

If the deal with the Turks materialises, it will not be the first time Zambia is getting mixed up with vulture funds. In 2005, Donegal International Limited a British Virgin Islands vulture fund sued the Republic of Zambia for US$42,305,026.50 together with interest – the total claim being for more than US$55 million.  This was after the Donegal bought off the $3.2 million debt owed to Romania which dated back to 1999.

The claim emanated from a failed settlement agreement dated 1 April 2003 signed by Michael Sheehan on behalf of Donegal and Emmanuel Kasonde, who was then the Zambian Minister of Finance and asset freezing orders against Zambia. In a credit agreement between Romania and Zambia dated 17 April 1979, Zambia incurred indebtedness to Romania in respect inter alia of acquisitions of agricultural machinery. By an assignment agreement dated 19 January 1999 Romania assigned the debt to Donegal.

In April 2003 Donegal and Mr Kasonde executed the Settlement Agreement which set out an agreement about the discharge of the debt which Donegal later claimed was breached and sued for recovery. The matter sucked in notable Zambians of the day some who are still alive, including Ministry of Finance officials, others were arrested on charges of corruption and abuse of office. All in all, Zambia ended up agreeing to pay over US$15 million over 3 years.

Facebooktwitterredditpinterestlinkedinmail

One Response to Mwanakatwe tries to calm fears over Eurobond debt

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Start: 2019-07-01 End: 2019-07-31