ZACCI APPLAUDS AGREEMENT IN PRINCIPLE ON GOVERNMENT DEBT RESTRUCTURING
Lusaka, October 27, 2023
The Zambia Chamber of Commerce and Industry (ZACCI) extends its sincere congratulations to the Government of the Republic of Zambia and the Steering Committee of the Ad Hoc Creditor Committee for their achievement in reaching an agreement in principle on the key commercial terms of a proposed restructuring transaction (the “Restructuring”) concerning the Government’s bonds due in 2022, 2024, and 2027 (the “Bonds,” and their holders, the “Bondholders”).
This significant development marks a significant step forward in the ongoing Zambia debt restructuring process, promising to unlock substantial resources for our nation’s developmental agenda.
The agreement to restructure the Euro bonds offers critical debt relief, including the permanent waiver of approximately $700 million in claims and the provision of approximately US$2.5 billion in cash flow relief through reduced debt servicing payments during the IMF Programme period.
This landmark agreement sets the stage for similar restructuring agreements with our other private creditors.
We look forward to a swift implementation of this agreement in principle by the year’s end. Our profound gratitude goes to all our creditors for their unwavering support and collaborative efforts that have brought us to this pivotal juncture.
From a private sector perspective, the implications of these developments are profoundly positive.
We anticipate a reduction of government reliance on domestic credit lines, which will in turn avert crowding out the private sector.
With moderated interest rates and heightened private sector appetite in the domestic credit lines, expansion and opening up of new production lines is anticipated.
Subsequently, more jobs will be created and revenue collection in form of taxation will be enhanced.
Furthermore, the renewed interest from non-residents in treasury bills and the injection of resources to stabilize exchange rates will create a conducive environment for business operations.
This, in turn, is anticipated to increase the availability of credit lines, thereby opening doors for private sector investments aimed at expanding existing industrial output, improving production processes, and establishing new projects and ventures.
The will also foster stability of the exchange rate and is poised to instil confidence in the market, fostering a culture of predictability and planned investment strategies.
Nevertheless, sustaining exchange rate stability remains a priority for ensuring long-term economic stability.
In conclusion, ZACCI remains steadfast in its commitment to supporting and promoting the interests of the business community in Zambia.
We eagerly anticipate the positive outcomes resulting from the agreement in principle on the key commercial terms of the proposed restructuring transaction related to the Government’s bonds due in 2022, 2024, and 2027 (the “Bonds,” and their holders, the “Bondholders”).