New Zambia pres. vows to cut 'unsustainable' debt

Dancing and cheers greeted Zambia's new president at his inauguration on Tuesday (August 24).

But behind the party atmosphere, Hakainde Hichilema faces a formidable challenge - tackling the southern African country's mountain of debt.

In November, Zambia became the first pandemic-era sovereign default.

Having been sworn-in, Hichilema told crowds in the capital Lusaka that the national budget had been overwhelmed by the cost of servicing the debt.

"We will pay special attention to lowering the fiscal deficit, reducing public debt and restoring social and market confidence in our country."

Hichilema won a landslide election victory over Edgar Lungu earlier this month - having lost five previous attempts at the presidency.

The former accounting firm CEO now faces negotiations with a diverse bunch of rival creditors.

Of Zambia's $12 billion in external debt, some $3 billion is in Eurobonds, $3.5 billion is bilateral debt, $2.1 billion is owed to multilateral agencies such as the IMF, and another $2.9 billion is commercial bank debt.

A quarter of the total is held by either China or Chinese entities in deals shrouded in secrecy clauses.

That makes negotiations for IMF relief particularly tough.

However, the economic cloud may have a silver lining.

In a sign that confidence could be returning, Zambia's dollar-denominated sovereign bonds have climbed heavily since Hichilema's surprise victory, reflecting optimism that the debt crisis can be resolved.

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