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The private sector has predicted substantial implications for the US$3.5 billion debt restructuring deal in stabilizing the exchange rate.
This is in reference to an agreement reached on Tuesday by the Zambian government with its bondholders to restructure US$3.5 billion arising from the country’s three Eurobonds.
The Zambia chamber of commerce and industry (ZACCI) in its comment on the deal is expectant of a stable exchange rate.
On behalf of ZACCI, its president, Anthony Kabaghe, in a statement on Wednesday said the apex body foresaw substantial implications of this debt restructuring deal in stabilising the exchange rate.
“This stabilisation will foster confidence in the market, cultivate a culture of predictability, and enable planned investment strategies, ultimately leading to economic growth,” Kabaghe said.
ZACCI, however, strongly recommended that the government prioritized transitioning the nation into an export-oriented country to ensure the long-term stability of the exchange rate and sustained economic growth.
Kabaghe said by promoting value addition across various sectors, Zambia could bolster its competitive advantage on the global stage, attract increased investment, and drive economic growth.
He also said ZACCI was of the view that this agreement would improve the country’s credit ratings on the international financial markets, making it easier and more affordable for Zambia to access external financing in the future.
“The successful restructuring of Zambia’s debt has the potential to bring about significant positive changes to the country’s economy and overall development trajectory.
“Nevertheless, it is crucial for the Zambian government to effectively manage the freed-up fiscal space, prioritize sustainable economic policies, and focus on export-oriented growth to ensure long-term economic stability and prosperity for the nation,” Kabaghe said.
According to ZACCI, this landmark agreement with the steering committee was pivotal for Zambia’s development trajectory.
The restructuring of the Eurobond is expected to provide crucial debt relief, with approximately US$840 million in claims being foregone, and offering approximately US$2.5 billion in cash flow relief through reduced debt servicing payments during the IMF Programme period.
Consequently, this debt restructuring deal is anticipated to have a positive ripple effect on the country’s economy.
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