An agreement in principle to restructure $3.5 billion of Zambia’s debt has been reached with private creditors. This agreement, according to President Hichilema, has freed up resources previously allocated to debt repayment, enabling Zambia to channel these funds towards essential economic development needs.
Zambia reaches historic agreement with private creditors. These creditors have agreed to restructure $3.5 billion of Zambian debt. The announcement was made this Monday, March 25, 2024 by President Hakainde Hichilema. According to President Hichilema, this agreement has freed up resources that were previously allocated to debt repayment, enabling Zambia to channel these funds towards essential economic development needs.
There are undoubtedly reasons to remember when you understand what the authorities are expressing today as relief in relation to this restructuring. The first reason is that the country is now going to suffer, because this colossal debt has long plagued the national economy, because the interest payments were eco-friendly.
Cyr Makosso, Political analyst
President Hichilema had declared in December 2023 that around 98% of Zambia’s official creditors had signed a memorandum of understanding to restructure the southern African country’s debt, estimated at $32.8 billion by the end of 2022, including $18.6 billion with foreign creditors such as China, its main lender.
The second reason is that today, with this restructuring, the country will in fact regain the possibilities, a new lease of life and approach to be able to invest not only in social policies but also in infrastructure. But we need to keep a clear head, because in the face of the euphoria of the Zambian authorities, we need to look at the reality of the debt. It’s a colossal debt today, estimated at over 32 billion dollars. So if we restructure 3.2 billion, we know that the debt is still very high. There’s still a very significant amount to repay.
Cyr Makosso, Political analyst
The debt restructuring agreement represents an important step forward for Zambia, fostering optimism about a brighter economic future as the country continues its journey towards stability and prosperity. Credit rating agency Moody’s predicts that the agreement will strengthen Zambia’s growth prospects, generating positive economic momentum.