Posted on Sep 2, 2021, 1:49 PMUpdated Sep 2, 2021, 5:36 PM
The election of the new Zambian president, Hakainde Hichilema, on August 16, was hailed by the markets. In less than two weeks, the price of dollar bonds issued by the country had risen by nearly 20% to regain 80% of their face value. Investors thus showed their confidence in the leader’s will to clean up the country’s finances, which defaulted on its debt in 2020. Even the issuance of bonds in local currency on August 30 had attracted record demand, nearly six times the supply.
But enthusiasm has subsided a bit in recent days. The new team in power has in fact discovered that the country’s indebtedness is much higher than the official figures show. “Transactions have been structured outside normal channels, debt has been accumulated without parliamentary approval,” the president explained.