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  • Analysis of Bilateral Restructuring - 07.23

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    mcginmcqater
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    The document analyzes Zambia's debt restructuring agreement with bilateral creditors. It shows that under the original payment schedule, debt payments as a percentage of government revenue would have been unsustainably high through 2043. The restructured terms significantly lower payments as a percentage of revenue through 2033, with a gradual increase thereafter, providing critical debt relief and fiscal space for Zambia in the coming years.

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    bilateral restructuring

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    Analysis-of-bilateral-restructuring_07.23

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    The document analyzes Zambia's debt restructuring agreement with bilateral creditors. It shows that under the original payment schedule, debt payments as a percentage of government revenue would have been unsustainably high through 2043. The restructured terms significantly lower payments as a percentage of revenue through 2033, with a gradual increase thereafter, providing critical debt relief and fiscal space for Zambia in the coming years.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    2 views11 pages

    Analysis of Bilateral Restructuring - 07.23

    Uploaded by

    mcginmcqater
    The document analyzes Zambia's debt restructuring agreement with bilateral creditors. It shows that under the original payment schedule, debt payments as a percentage of government revenue would have been unsustainably high through 2043. The restructured terms significantly lower payments as a percentage of revenue through 2033, with a gradual increase thereafter, providing critical debt relief and fiscal space for Zambia in the coming years.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 11

    •

    •
    Zambia bilateral debt payments as percentage of
    government revenue
    16
    % government revenue

    14
    12
    10
    8
    6
    4
    2
    0
    2021
    2022
    2023
    2024
    2025
    2026
    2027
    2028
    2029
    2030
    2031
    2032
    2033
    2034
    2035
    2036
    2037
    2038
    2039
    2040
    2041
    2042
    2043
    Original payment schedule Restructured payments
    •
    •

    1
    33% of original principal, 40% including the accrued interest
    •

    •
    •

    2
    https://uk.finance.yahoo.com/news/zambia-pay-1-interest-mission-145726422.html And
    https://twitter.com/TheoMaret/status/1673697387758362626/photo/1
    3
    https://twitter.com/TheoMaret/status/1673697387758362626/photo/1
    •
    •

    Estimate of original payment schedule


    700
    600
    500
    $ million

    400
    300
    200
    100
    0

    Payments to China Payments to other bilateral creditors

    4
    These amounts are lower than the amounts stated as owed now as it is our understanding that the amount
    owed now includes interest arrears from the last two years of default.
    Old and new bilateral payments, current $ million
    900
    800
    700
    600
    $ million

    500
    400
    300
    200
    100
    0
    2021
    2022
    2023
    2024
    2025
    2026
    2027
    2028
    2029
    2030
    2031
    2032
    2033
    2034
    2035
    2036
    2037
    2038
    2039
    2040
    2041
    2042
    2043
    Original payment schedule Restructured payment schedule

    5
    https://www.znbc.co.zm/news/musokotwane-unpacks-debt-restructuring-deal/
    Zambia bilateral debt payments as percentage of
    government revenue
    16
    % government revenue

    14
    12
    10
    8
    6
    4
    2
    0
    2021
    2022
    2023
    2024
    2025
    2026
    2027
    2028
    2029
    2030
    2031
    2032
    2033
    2034
    2035
    2036
    2037
    2038
    2039
    2040
    2041
    2042
    2043
    Original payment schedule Restructured payments

    6
    Calculated from IMF World Economic Outlook database.
    7
    These amounts are lower than the amounts stated as owed now as it is our understanding that the amount
    owed now includes interest arrears from the last two years of default.
    8
    These amounts are lower than the amounts stated as owed now as it is our understanding that the amount
    owed now includes interest arrears from the last two years of default.
    •
    •

    •
    •
    •

    9
    https://www.reuters.com/markets/rates-bonds/zambias-bondholders-sees-debt-restructure-deal-coming-
    weeks-2023-06-27/
    10
    Or compared to the principal with accrued interest from $3.6 billion to $1.8 billion, a 50% haircut
    11
    We have used the 20 year bond yield for this calculation because the Zambian debt will in the end have been
    owed over 20 years – 2012 – 2033.
    •

    12
    We have used the 10 year bond yield here because this Zambian debt is owed over 10 years, 2023 to 2033.
    13
    Zambia bonds have at times traded cheaper than 43% to 46% of face value, so those buying at less than
    these amounts are likely to make more than 50% profit.
    Zambia bilateral debt payments as percentage of
    government revenue
    16
    14
    12
    10
    8
    6
    4
    2
    0
    2031
    2021
    2022
    2023
    2024
    2025
    2026
    2027
    2028
    2029
    2030

    2032
    2033
    2034
    2035
    2036
    2037
    2038
    2039
    2040
    2041
    2042
    2043
    Original payment schedule Restructured scenario 1 Restructured scenario 2

    •
    •
    •
    •

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