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The Economics Association of Zambia Weighs In on Eurobond Restructuring Deal

The recent Eurobond restructuring deal between the Government of the Republic of Zambia and bondholders has sparked significant economic and business interest across the nation. In response, the Economics Association of Zambia (EAZ) has issued a statement shedding light on the matter.

Dr. Oswald Mungule, President of the Economics Association of Zambia, conveyed that the bondholders have responded positively to the call for consent to the restructured terms of the initial $3 billion Eurobond, which had accrued to approximately $3.98 billion by 2024 due to accumulated interest and penalties. Despite this, Zambia’s credit rating remains low, indicating a high credit risk. 

However, Dr. Mungule expressed confidence that the bondholders viewed the new terms favourably for both Zambia and themselves given the prevailing credit conditions. 

He also highlighted the positive step towards achieving the objectives of the G20 countries’ Common Framework for debt restructuring.

Dr. Mungule commended the Government’s efforts in navigating the debt sustainability and macroeconomic stability path, emphasizing that this is just the beginning of improving sovereign risk, which remains high and hampers rapid economic growth and development. 

He noted that the full restructuring of the Eurobond under the deal would provide Zambia with a cashflow relief of approximately $2.5 billion until 2025, coinciding with the end of the International Monetary Fund Extended Credit Facility.

Looking ahead, 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 to implement the new terms. 

He also called for a clear roadmap for resource mobilization, particularly for debts under debt service suspension, considering prevailing economic conditions.

Moreover, 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 highlighted 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 to ensure 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 underscored the importance of effective fiscal policies and transparency in achieving long-term debt sustainability and restoring fiscal stability.

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