The Centre for Trade Policy and Development (CTPD) has urged government to pursue the US$750 million Eurobond refinancing agenda with great caution and avoid projecting desperation if the country is to find sustainable solutions that will help Zambia navigate through this growing crisis without further indebting the country.
President Edgar Lungu recently while holding bilateral talks with his Turkish counterpart Tayyip Erdogan disclosed that a Turkish company has expressed interest in refinancing Zambia’s $750 million Eurobond falling due in 2022.
But CTPD says there is need to clearly define what the nation hopes to archive or get out of this restructuring efforts the government has commenced, otherwise failure to do so will just leave the country in more debt.
CTPD Executive Director Isaac Mwaipopo is of the view that refinancing the loan at this time may translate into increased costs due to the suspended International Monetary Fund (IMF) bailout program package adding that the government should concentrate on realizing fiscal consolidation and the operationalization of a sinking fund.
Mr. Mwaipopo recalls that the Ministry of Finance informed the general public in 2017 that the government would operationalize a sinking fund that was to help government set aside funds for the repayments of Eurobonds when they fall due after 2021.
He says this strategy had the potential to reduce the risk of default and ease pressure on debt servicing when the Eurobonds Mature.
Mr. Mwaipopo says the center is of the view that the Zambian government should first work on improving its credit worthiness by reengaging with the IMF and pursuing visible fiscal consolidation.
He is further urging the government to trade cautiously as it explores refinancing options, there will be need to count the cost and clearly establish payment plan from the very onset, otherwise it may turn out to another huge cost to the Zambian economy and the Zambian people.