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Heltaher
Heltaher

Zambia

The Debt Architecture – Part 4: The Default Trap

·1700 words·8 mins
History and Critical Analysis Sovereign Default Debt Restructuring Zambia Argentina Development Economics Historical Case Studies Policy and Critique Development and Inequality Economic Systems
When Zambia defaulted in 2020, it entered a restructuring process that took 46 months. During those 46 months it was locked out of capital markets, its currency fell 44%, and its infrastructure pipeline froze. The haircut it achieved was 18% in NPV terms. Its projected return to markets carries an 800-basis-point spread. The arithmetic of default suggests that the savings from restructuring may be outweighed by the cost of re-entry.

The Debt Architecture – Part 1: The Double Bind

·1790 words·9 mins
History and Critical Analysis Sovereign Debt Development Economics Zambia Sri Lanka Debt Crisis Historical Case Studies Policy and Critique Development and Inequality Economic Systems
Zambia borrowed at 8.6% in US dollars to build infrastructure in a country whose primary export revenue comes from copper. In 2014, copper prices fell 45%. In 2022, the dollar strengthened 27%. By 2020, Zambia's debt service consumed 2.3 times its combined health and education spending. The trap was not corruption. It was arithmetic.