By Bennie Mundando
The Economics Association of Zambia (EAZ) says it is encouraged that the Zambian Government has joined other countries in implementing measures aimed at cushioning the negative economic effects of COVID-19, including debt management.
EAZ president Lubinda Haabazoka says earlier this year when the Association analysis had forecasted stress for economies around the world especially for emerging markets like ours, it called upon the Zambian government to immediately engage its global partners in the aim of suspending certain multilateral debt payments and negotiating for easing down conditions especially on commercial debt as practiced by similar countries.
Dr. Haabazoka says the Association is delighted to see the Zambian Government appoint Lazard Freres as financial advisor to help restructure its external debt as the practice is around the world for countries with bonds actively trading on the international capital markets.
He says the move was positively received by the market.
“We would like to assure the markets and citizens that the current solicitation to suspend coupon payments is part of the debt management strategy Zambia has embarked on with the help of Lazard and should not be treated as a default.
“The public solicitation is part of the procedure any bond issuer has to go through in such circumstances. Should the bond holders refuse to suspend coupon payments, the Zambian government will still trade business as usual,” Dr. Haabazoka said.
He says in August 2020, the Zambian government applied for the G20 debt service suspension initiative and is also requesting for similar debt service suspension from its commercial creditors and that the country is not the only emerging market undergoing the same procedure.
He has however called for continued transparency about the debt situation and remedies that are being implemented to ensure that the debt remains sustainable despite the harsh global economic environment.
“We also call upon the general public to take keen interest in what is happening around debt management in Zambia but not to be speculative as issues to do with commercial debt or bond markets are highly sensitive to market information.
“As an Association, we shall engage the Minister of Finance in a public discussion to discuss among other things the 2021 budget and debt management,” he said.