What can Zambia’s debt default teach us about the debt crisis?
Following a stand-off with commercial creditors and protracted but unresolved negotiations with the IMF, Zambia defaulted on its external sovereign debt on 13 November this year.
While most commentary has focused exclusively on the government’s sovereign borrowing, our own research has detected massive outflows of private wealth over the past 15 years, hidden away in an obscure part of the country’s financial account.
In this post on the ISS blog, BlISS, Dr Andrew Fischer looks into the lessons that need to be central in discussions about debt justice in the current crisis. His discussion is based on research he has conducted on the political economy of externally financing social policy in developing countries.
Although most of the commentary on Zambia’s default focuses exclusively on the government’s sovereign borrowing, the analysis carried out by Fischer and his co-researches peers behind this headline to focus on the intricacies of financial flows into and out of the economy.
With many other African countries also facing debt distress, this huge siphoning of wealth from Zambia provides crucial lessons that need to be central in discussions about debt justice in the current crisis.