By Daily Revelation Editor
President Hakainde Hichilema and his UPND administration have done a commendable job for securing the debt restructuring, first with bilateral and multilateral lenders, and secondly with bondholders, although more work still needs to be done.
There are arguments that the country has actually achieved nothing for attaining this milestone, with some arguing that what the government has achieved is simply to postpone the repayment of debt. But it can also be argued that the country has been suffocating to meet its debt obligations right now, therefore it should be celebrated that we have bought ourselves sometime in terms of those debt obligations so that if the government puts its act well, we shall be in a position to pay up when the time is due.
It should show us the desperate levels the country has been to that today a debt restructure could be celebrated from the mountain tops in this manner. We feel the former administration of Edgar Lungu was very reckless in its borrowing to have allowed the debts to reach such unsustainable levels, and Hakainde must take a leaf from that so that as he works on restructuring the former debt, he is not accumulating huge debts himself which will require him or another leader to start cleaning up the mess in the future.
Given the desperate situation the country is in, this debt restructuring should not be trivialised in any way. It surely is something very important that it consumed even the attention of debt creators themselves in Edgar’s administration to have picked Lazard freres to provide advisory services regarding liability management for the country’s debt portfolio at $5million.
It’s just that sometimes people have short memories, but we all saw the problems and downgrades this country faced when it became the first coronavirus defaulter on debt. Zambia in November 2020, defaulted after the country opted to bow out of $42.5 million Eurobond repayment, becoming the first African nation to default on its debt in the Covid-era. The downgrades from reputable rating agencies such as Fitch Ratings quickly followed on the back of that default, downgrading the country from CC to Restricted Default. Another rating agency S&P Global Ratings had already rated Zambia at Selective default ahead of the expiry of a 30-day grace period. With such downgrades, the country’s capacity to borrow and international standing also took a huge blow, becoming like someone who has almost been declared bankrupt. Which institution would lend money to an individual hovering along the paths of bankruptcy?
In October 2021, Finance minister Situmbeko Musokotwane told the nation that the country’s debt was almost $17 billion, with debt to the Chinese almost twice the previous official figure. And in 2023, the official sector Creditor committee (OCC) co-chaired by China and France reached an agreement with the government to restructure the country’s combined $6.3 billion debt.
In March 2024, the country reached an agreement with a group of private creditors on restructuring $3 billion of its international bonds. However, debate should be had on why such huge sums to the tune of $45 million will be paid to Lazard by the UPND administration on helping the country to restructure the debt.
But it is unprogressive and a waste of energy to minimise the work the UPND administration has put in place to get the country to this level. Surely, countrymen are urged to expend their energies debating worthy causes. Instead of wasting time debating the merits and demerits of the debt restructuring, talk should be channeled towards demanding to know from the government what productive ventures they will engage in to ensure a boost in revenues so that when the time for the restructured payments falls due, the country will not be sucked into renegotiating the restructured debt again.
Zambians should demand to know how the administration will boost economic activity for instance in anticipation of future debt obligations, given that part of this year can as well be written off given the droughts and the load shedding which will hammer particularly agricultural productivity and energy, and thereby depressing economic output. In addition to that, it remains to be seen how the mines will perform given that the new investors are already talking about being light years from profitability, and the tax holidays that have been given to them and the other mining investors in general.
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By Daily Revelation Editor
President Hakainde Hichilema and his UPND administration have done a commendable job for securing the debt restructuring, first with bilateral and multilateral lenders, and secondly with bondholders, although more work still needs to be done.
There are arguments that the country has actually achieved nothing for attaining this milestone, with some arguing that what the government has achieved is simply to postpone the repayment of debt. But it can also be argued that the country has been suffocating to meet its debt obligations right now, therefore it should be celebrated that we have bought ourselves sometime in terms of those debt obligations so that if the government puts its act well, we shall be in a position to pay up when the time is due.
It should show us the desperate levels the country has been to that today a debt restructure could be celebrated from the mountain tops in this manner. We feel the former administration of Edgar Lungu was very reckless in its borrowing to have allowed the debts to reach such unsustainable levels, and Hakainde must take a leaf from that so that as he works on restructuring the former debt, he is not accumulating huge debts himself which will require him or another leader to start cleaning up the mess in the future.
Given the desperate situation the country is in, this debt restructuring should not be trivialised in any way. It surely is something very important that it consumed even the attention of debt creators themselves in Edgar’s administration to have picked Lazard freres to provide advisory services regarding liability management for the country’s debt portfolio at $5million.
It’s just that sometimes people have short memories, but we all saw the problems and downgrades this country faced when it became the first coronavirus defaulter on debt. Zambia in November 2020, defaulted after the country opted to bow out of $42.5 million Eurobond repayment, becoming the first African nation to default on its debt in the Covid-era. The downgrades from reputable rating agencies such as Fitch Ratings quickly followed on the back of that default, downgrading the country from CC to Restricted Default. Another rating agency S&P Global Ratings had already rated Zambia at Selective default ahead of the expiry of a 30-day grace period. With such downgrades, the country’s capacity to borrow and international standing also took a huge blow, becoming like someone who has almost been declared bankrupt. Which institution would lend money to an individual hovering along the paths of bankruptcy?
In October 2021, Finance minister Situmbeko Musokotwane told the nation that the country’s debt was almost $17 billion, with debt to the Chinese almost twice the previous official figure. And in 2023, the official sector Creditor committee (OCC) co-chaired by China and France reached an agreement with the government to restructure the country’s combined $6.3 billion debt.
In March 2024, the country reached an agreement with a group of private creditors on restructuring $3 billion of its international bonds. However, debate should be had on why such huge sums to the tune of $45 million will be paid to Lazard by the UPND administration on helping the country to restructure the debt.
But it is unprogressive and a waste of energy to minimise the work the UPND administration has put in place to get the country to this level. Surely, countrymen are urged to expend their energies debating worthy causes. Instead of wasting time debating the merits and demerits of the debt restructuring, talk should be channeled towards demanding to know from the government what productive ventures they will engage in to ensure a boost in revenues so that when the time for the restructured payments falls due, the country will not be sucked into renegotiating the restructured debt again.
Zambians should demand to know how the administration will boost economic activity for instance in anticipation of future debt obligations, given that part of this year can as well be written off given the droughts and the load shedding which will hammer particularly agricultural productivity and energy, and thereby depressing economic output. In addition to that, it remains to be seen how the mines will perform given that the new investors are already talking about being light years from profitability, and the tax holidays that have been given to them and the other mining investors in general.
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UPND has auctioned country’s future through mine sales, tax holidays – Sichinga … I wonder how they will manage to repay the restructured debt
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