MoU with bilateral creditors sets right tone for Zambia’s future economic growth —Policy group

Zambia Institute of Policy Analysis and Research (ZIPAR) says the country’s agreement to sign a Memorandum of Understanding (MoU) with its bilateral creditors on restructuring about US$6.3 billion of debt sets a base for future economic growth.

Almost three years after Zambia defaulted, the country on Saturday clinched a deal with its bilateral creditors on restructuring about US$6.3 billion of debt.

Each official creditor would now begin their internal process to sign the MoU.

Commenting on this announcement, ZIPAR Executive Director, Herrick Mpuku, in an interview on Wednesday expressed confidence that it offered opportunities for growth while setting a base for future economic expansion.

“What this agreement does is to lay the base for future economic growth. It offers opportunities for growth and sets a base for growth.

“The idea behind all the macroeconomic adjustments that we have been making is to bring about stability, reducing inflation, stabilising the exchange rate and beginning to reduce interest rates,” he said.

Read more: Policy institute calls on Zambia’s official creditors to disclose stance on country’s debt relief quest

Mpuku was also of the view that the development was a confirmation of what was agreed on with the government.

He said Zambia’s fiscal space which government had been talking about would now become a reality following the development.

“The MoU is a confirmation on what was agreed earlier, the decision has been made that Zambia could go through with the debt restructuring process. So, it is just confirming that we are good to go.

“From now on all the individual creditors have to sign these MoUs with the Zambian government to confirm that they are going to be part of that process,” according to Mpuku.

He, however, emphasised the need to adhere to strictness in terms of expenditure and economic management.

“From there is it a question of implementing the agreement which is restricting the level of debt service and also reduce the debt interest rates to a maximum of two percent.

“So, the fiscal space we have been talking about will now become a reality. So now things will be relatively normal, life will go on but still maintaining strictness in terms of expenditure and economic management,” Mpuku concluded.

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