• If the country is able to restructure its debt, most of the available resources will go towards financing the social sectors.
• China’s positive response towards Zambia’s debt restructuring process will also boost investor confidence.
• Investors want to make sure that the country is heading in the right direction.
An Economist says the country is failing to finance various social sectors due to the current huge debt stock owed to China and other multilateral financial institutions.
Speaking in an interview with Money FM News, Mambo Phiri commended China for making efforts to help Zambia restructure its debt.
Mr. Phiri said if the country is able to restructure its debt, most of the available resources will go towards financing the social sectors such as health and education, to improve the struggling economy.
“The move by China to ensure that they come up with a strategy to make sure that we have the debt restructuring process is a welcome move because due to the current huge debt stock that we have, we are failing to finance various social spending sectors. So if we can be in a position where we can be able to structure our debt, it will give us a breather to ensure that most of the funding is going towards the social sector so that we can grow our struggling economy,” Mr. Phiri stated.
He added that China’s positive response towards Zambia’s debt restructuring process will also boost investor confidence because most investors want to be sure that the country is heading in the right direction before making any investment pledges.
“The move is very good and also pertaining to the investors, most of the investors want to get that news to make sure that the country is heading in the right direction and also that there is confidence within the debt Credit committee. Also the Creditors themselves have that assurance that as a country you are going to benefit in the long term as you are trying to restructure the debt and be able to pay as you are trying to inject liquidity in the economy,” he added.
Zambia owes China nearly US$6 billion out of nearly US$17 billion in total external debt.
Recently, China’s Foreign Ministry Spokesperson Wang Wenbin’s Regular said at a Press Conference that China will continue to stay in close communication and friendly consultations with Zambia and all other parties concerned and play a constructive part in resolving Zambia’s debt issue.
“As Zambia’s friend, China attaches high importance to Zambia’s concerns about the debt issue. China is the first international official creditor that provided debt relief for Zambia, and facilitated the success of three meetings of the Creditor Committee for Zambia as a co-chair.”
“According to the data released by Zambia’s Ministry of Finance and National Planning, the debt of predominantly Western commercial lenders and multilateral financial institutions account for 70 percent of Zambia’s foreign debt. They should take up due responsibilities and take stronger actions to relieve Zambia’s debt burden.”
