Over 100 economists and development experts have called on BlackRock and other creditors to cancel a significant amount of Zambia’s debt. In an open letter released today, the signatories – including Jeffrey Sachs, Jayati Ghosh, Philip Alston, Raj Patel and Cephas Lumina – call for a large-scale debt restructuring, and for the UK and New York to pass legislation to ensure that all private creditors comply with the G20’s debt relief scheme.
Zambia is starting negotiations with private creditors this month to reduce the amount of debt owed. On 6 September the IMF called for $8.4 billion of Zambia’s debt payments between 2022 and 2025 to be cancelled.
In the letter the experts say:
“Because of the high interest rates and the fact Zambia’s bonds have been trading at well below face value since 2018, many bondholders stand to make huge profits at the expense of both Zambian citizens and creditor countries if paid at face value. It is therefore imperative that BlackRock and other bondholders agree to fully engage in a large-scale debt restructuring, including significant haircuts, in order to make Zambia’s debt sustainable.”
“Zambia’s bonds are all governed by English law. In 2010, the UK parliament passed a ground-breaking Act to enforce a previous debt relief scheme, the Heavily Indebted Poor Countries initiative, on debts governed by English law. The UK should do the same again to ensure that all private creditors comply with the terms of G20 Common Framework debt restructurings. New York – the other key jurisdiction for sovereign debts – should do the same.”
The signatories conclude by saying:
“At a time of global crisis, it is economically inefficient and morally wrong for high interest debts to be paid to private lenders, while governments cut back on support for their own people. The world urgently needs a strengthened scheme to deliver debt restructuring for countries and people in need.”
Zambia first applied for debt relief through the G20’s Common Framework for Debt Restructuring in February 2021. No debt has yet been restructured, but in July 2022 government lenders including China agreed in principle to conclude a restructuring in line with the IMF’s assessment of how much debt relief is needed. Zambia is now seeking to reach agreement with private lenders which is also in line with the IMF’s assessment.
BlackRock is the largest owner of Zambia’s bonds, holding $220 million. Debt Justice has estimated that BlackRock could make 110% profit for itself and its clients from Zambia’s debt if paid in full. The Zambian Civil Society Debt Alliance, Debt Justice, Global Justice Now, Action for Southern Africa (ACTSA), Christian Aid, Cafod and Jubilee Scotland are campaigning for BlackRock and other private lenders to cancel the debt.