Earlier this year bondholders including BlackRock agreed a debt restructuring deal for Zambia after it declared bankruptcy in 2020.
The deal could reduce the government’s repayments by up to £1.1 billion and spread future payments over a much longer time frame, but it took four years to negotiate.
The delays were allegedly caused by private creditors holding out for an agreement which delivers better profits.
Even after debt relief measures, Zambia will still pay two-thirds of its budget on debt servicing between 2024 and 2026.
A previous investigation by another aid agency, the Catholic charity Cafod, claimed that BlackRock, which is also the largest private creditor to Ghana, Nigeria, Zambia and Senegal, actively obstructs debt relief schemes.
Dario Kenner, Cafod’s policy lead on debt, said that the refusal of “cowboy lenders” to cancel or restructure debt was “shameful”.
The IMF and World Bank are very open about how their loans should be paid back, often by encouraging governments to increase consumer taxes like VAT.
By contrast, repayment schemes for Eurobonds are deliberately opaque, campaigners say.
The struggle is further compounded by banks’ insistence on being repaid in US dollars, a currency which is always stronger than that of the indebted country.
“Some of the debt is wrapped up in more debt and that’s wrapped up in Eurobonds and other financial packages,” continued Ms Larbie, Christian Aid’s head of campaigns.
“So, it’s difficult to get a line-by-line account of how much debt is owed to one individual private company account. That’s very deliberate. What it allows private creditors to do is have real leverage over governments, because we’re not able to truly understand the scale of what is owned by individual companies.”