Economics Association of Zambia Analyzes Impact of Eurobond Restructuring Deal
The recent Eurobond restructuring deal between the Government of Zambia and bondholders has garnered significant economic and business interest across the nation. In response, the Economics Association of Zambia (EAZ) has issued a statement providing insights into the matter.
Dr. Oswald Mungule, President of the EAZ, announced that bondholders have positively responded to the restructured terms of Zambia’s initial $3 billion Eurobond, which had accrued to approximately $3.98 billion by 2024 due to accumulated interest and penalties. Despite this progress, Zambia’s credit rating remains low, indicating a high credit risk.
Dr. Mungule expressed confidence that the bondholders viewed the new terms as beneficial given the prevailing credit conditions.
He emphasized that this restructuring is a positive step towards achieving the objectives of the G20 countries’ Common Framework for debt restructuring.
He commended the Zambian Government’s efforts in navigating the path towards debt sustainability and macroeconomic stability.
Dr. Mungule highlighted that while this is a significant step, Zambia’s sovereign risk remains high, which continues to hamper rapid economic growth and development.
The restructuring deal is expected to provide Zambia with cash flow relief of approximately $2.5 billion until 2025, aligning with the conclusion of the International Monetary Fund Extended Credit Facility.
Dr. Mungule stressed the importance of transparency and accountability, urging the Government to outline clear timelines for finalizing agreements with both bilateral and Eurobond creditors.
He also called for a comprehensive roadmap for resource mobilization, particularly for debts under debt service suspension, considering the prevailing economic conditions.
Additionally, the EAZ emphasized the need to expedite the restructuring and refinancing of the remaining 25% of Zambia’s private external public credit, especially amidst a national drought disaster.
Dr. Mungule underscored the importance of implementing effective fiscal policies and promoting transparency in debt restructuring conversations as outlined in the Public Debt Management Act No. 15 of 2022. These measures are crucial for ensuring long-term debt sustainability.
In conclusion, Dr. Mungule reiterated the EAZ’s commitment to providing economic information to the public, particularly on emerging issues related to Zambia’s debt management strategies.
He highlighted the importance of effective fiscal policies and transparency in achieving long-term debt sustainability and restoring fiscal stability.
