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The Zambia Institute of Policy Analysis and Research (ZIPAR) has called on the country’s official creditors to transparently clarify their position on debt relief as their silence threatens economic gains achieved so far.
ZIPAR is concerned that while significant progress has been achieved in reaching an understanding with the International Monetary Fund (IMF), securing the goodwill of bilateral creditors, the fundamental issue remains unresolved.
Executive Director, Herrick Mpuku, observed at the launch of the Eminent Persons Forum (EPF) in Lusaka recently that the resolution of the debt which was foreseen to come into force by the first quarter of 2023 had lagged on.
“In the present circumstance, the trajectory of the recovery has stalled with instability in price level and the exchange rate and growing debt.
“In these exceptionally difficult times, it appears necessary for the international financial community to clarify their position transparently and allow the country to move on,” Mpuku said.
Official statistics from the Finance and National Planning Ministry indicates that central government external debt as at 31st January 2023 amounted to US$13.96 billion from US$13.36 billion in 2022.
Zambia is currently struggling with its official creditors to reach a tangible resolution for financial assurances.
Without these financial assurances from the creditors, Zambia will not access the US$188 million distribution from the IMF despite the economy picking up.
Mpuku’s call resonates with those recently made by President Hakainde Hichilema and his Finance and National Planning Minister, Situmbeko Musokotwane who insisted that it was now time for the G20 common framework to decide on Zambia for debt treatment as the country had met all the required benchmarks, without exception.
Read more: Zambia’s official creditors meet, IMF hopeful of debt relief soon
According to Mphuku, it behoved ZIPAR and as a wider community to be seized of this matter and to consider possible avenues for sustainable economic recovery.
He pointed out that the alternatives would be too ghastly to contemplate.
At the same function, Finance and National Planning Minister, Situmbeko Musokotwane, said the debt restructuring was being anchored by the US$1.3 billion IMF Extended Credit Facility which would go towards balance of payment and budget support.
He said through the ministry’s Permanent Secretary for Planning and Administration, Lois Mulube, that Successful debt restructuring and completion of the IMF Program would allow Zambia to unlock critical sectors of the economy which would enhance macroeconomic activity, promote growth and stability.
“The Ministry of Finance and National Planning, is working tirelessly with the IMF and our financial and legal advisors in restructuring the country’s debt, which is necessary to stabilise Zambia’s macroeconomic outlook,” he said.
Ex-Central Bank Governor, Caleb Fundanga, said debt restructuring could only succeed if after the macroeconomic environment was stabilised and able to support economic growth that is sufficient to support debt sustainability.
He observed that rapid economic growth itself was a necessary condition for reducing indebtedness.
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