Zambia is set to default on its external debt when the copper producing nation misses $118 million in interest payments on Eurobonds due from October 14 to March 2021.

The Southern African country is banking on a comprehensive debt restructuring plan but without help from its largest creditor, China, as well as a substantial macroeconomic adjustment program supported by the International Monetary Fund (IMF), that will be impossible.

In the process of defaulting, Zambia sets an unwanted record of being the first comprehensive case involving all creditor classes this year. Moreover, the Paris Club and bondholders have said that they will not restructure debt without appropriate burden-sharing by China.

Zambia, Africa second largest copper producer, has requested creditors to defer interest payments on three outstanding dollar-denominated bonds as it battles a financial crisis at home.

The crisis has driven spending and affected copper earnings, its largest source of export revenues.

Zambia is also battling public debt which has sky rocketed during President Edgar Lungu’s tenure in office. The coronavirus pandemic has hit the copper mining sector hard, as demand for copper raw materials dwindled due to forced lockdowns across the world.

According to the Chamber of Mines, a change in tax regime would be hugely beneficial “since a good proportion of Eurobond holders also hold shares in mining and prospecting in Zambia.”

The institution says, “Changes in the taxation regime would spur growth in the sector and aid bondholders mitigate their income loss during the proposed moratorium on coupon payments.”

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