Zulu, StanChat boss, lists gains of debt restructuring deal on banking industry

Zambia may likely experience a positive impact on the banking industry, with probability of improved foreign exchange liquidity given the debt restructuring deal.

This is according to Standard Chartered Bank Zambia Chief Executive Officer, Sonny Zulu, who said commercial banks were likely to demonstrate more appetite for lending and asset growth as result of the deal.

He said improved foreign liquidity would give banks greater appetite for lending which will, in turn, lead to increased assets growth and improved access to finance for businesses and individuals.

“Banks are likely to demonstrate greater appetite for lending and asset growth as result of the deal. We will also expect to see more foreign investor flows, which are likely going to improve foreign exchange liquidity. This will become clearer when the Budget will be presented in September,” Zulu said in a statement.

Read more: Zambia to pay creditors only $750m over 10 years under debt restructuring deal —Finance Minister tells Parliament

He stated that the debt restructuring deal was a positive step forward for the country’s economy.

Zambia, according to Zulu, would be set on a sustainable growth trajectory and macroeconomic stability.

Zulu stated that one of the most significant benefits of the deal on the private sector and individuals is the anticipated low interest rates.

He said lower interest rates would make it easier for business and individuals to access financing, thereby stimulating and igniting new growth opportunities.

“Interest rates are likely to come down once we see Foreign Exchange (FX) stability. As FX has a bearing on inflation, stable FX will be supportive of stable inflation / interest rates.

“This stable currency is also a catalyst for lower rates from a Non-Resident participation point of view. We hope to see less ‘crowding out’ of the private sector by the government, who sometimes step into the market to raise funds,” Zulu said.

According to the agreement, the country’s external debt maturity will be extended to 20 years, with a 3-year holiday, easing the burden of debt servicing and providing breathing space for necessary economic reforms.

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