• This will enable the country to make timely payments and improve its creditworthiness.
• Zambia may regain the confidence of investors and creditors, enabling it to secure new financing on favorable terms.
• This signifies a significant development in the country’s efforts to manage its debt burden.

An Economist says Zambia’s agreement with its Eurobond holders to restructure over $3.5 billion debt will enable the country to make timely payments, reduce the risk of default and improve its creditworthiness in the eyes of credit rating agencies.

Moses Mwamba told Money FM News in an interview that by demonstrating a commitment to addressing its debt challenges, Zambia may regain the confidence of investors and creditors, enabling it to secure new financing on favorable terms.

Mr. Mwamba said this would improve Zambia’s debt servicing capacity, as it will enhance the country’s ability to meet its debt obligations

“Zambia’s agreement with its Eurobond holders to structure more than $3.5billion debt under the G20 common framework signifies a significant development in the country’s efforts to manage its debt burden.”

“By extending repayment periods or reducing interest rates, debt servicing costs will become more manageable.  Zambia will be more likely to make timely payments on its debts, reducing risk of default and improving its creditworthiness,” Mr. Mwamba noted.

He added that if debt restructuring leads to improved debt sustainability and economic stability, it could create a more conducive environment for economic growth and sustainable development initiatives.

“This debt relief will alleviate immediate financial pressures and free up resources for essential public spending,” he added.

Last week, Zambia reached a conclusive agreement with External Bondholder Steering Committee on a restructuring of the country’s $3.5 billion debt under the G20 Common Framework.

According to Ministry of Finance, the agreement to restructure the Eurobonds provides essential debt relief provided by the Bondholders, including foregoing around $840 million in claims and offering approximately US$2.5 billion in cash flow relief through reduced debt servicing payments during the IMF Programme period.

Zambia issued three Eurobonds of 750 million dollars in 2012, 1 billion dollars in 2014, and 1.25 billion dollars in 2015.