BlackRock urged to delay debt repayments from crisis-torn Zambia

theguardian.com:

BlackRock, the world’s largest fund manager, has come under pressure to delay demands for debt interest payments from Zambia to prevent the crisis-hit African country’s finances from spiralling out of control.

Anti-poverty campaigners said BlackRock, which manages $10tn (£7.68tn) of assets, was among the private sector lenders that had refused to reduced the interest rate or delay payments on Zambian bonds, unlike governments and international agencies that hold the country’s debts.

The charity Jubilee Debt Campaign said it estimated the asset manager, which holds $220m of Zambian sovereign bonds, mostly on behalf of clients in its index-linked exchange-traded funds, could generate a $180m profit if the debts were paid in full.

“This would represent a 110% profit on what we estimate BlackRock paid for the debt,” the charity said.

Zambia, which has cut health and social care spending by a fifth in the last two years to balance its budget, has seen its debts soar in recent years to fund infrastructure projects, many to help the country supplement drought-affected hydro power plants.

Solar energy projects have made the country almost self-sufficient in electricity, but the high cost of borrowing and the Covid crisis has crippled the country’s finances.

Further loans from the International Monetary Fund (IMF) have been tied to commitments to end fuel subsidies to households and businesses, pushing the inflation rate above 20% last year.

Of Zambia’s external debt, 46% is owed to private lenders, 22% to China, 8% to other governments and 18% to multilateral institutions.

China is among the government lenders to agree a longer debt repayment schedule that private lenders, including banks, have so far resisted, the Jubilee Debt campaign