Kwacha Today

20/11/2023

14/10/2023

BREAKING NEWS!

ZAMBIA AGREES MEMORANDUM OF UNDERSTANDING WITH OFFICIAL CREDITOR COMMITTEE, PAVING WAY FOR DEBT TREATMENT COMPLETION

The Ministry of Finance and National Planning of the Republic of Zambia is pleased to announce that a Memorandum of Understanding (MoU) has been agreed with its Official Creditor Committee (OCC) on the comprehensive debt treatment agreed in June 2023. Zambia’s OCC is co-chaired by China and France, and Vice-Chaired by South Africa.

The MoU formalises the agreement reached in June with official creditors and represents an important milestone in Zambia achieving long-term debt sustainability.

Each official creditor will now begin their internal process to sign the MoU. Following the signing of the MoU, the terms will be implemented through bilateral agreements with each member of the OCC. The Ministry of Finance and National Planning is hopeful that the formalisation of the OCC agreement will further support the progress Zambia is making in achieving a comparable agreement with its private creditors to resolve the debt overhang.

Zambia is continuing its good faith engagement with all its commercial external creditors and hopes to conclude restructuring agreements that would both respect Zambia’s need for debt relief and the comparability of treatment principle. Zambia also reiterates its firm commitment to remain in arrears with its external commercial creditors until agreements compatible with the comparability of treatment principle are reached.

Related to the development, the Minister of Finance and National Planning, Dr. Situmbeko Musokotwane, says:

“We are grateful to all our official creditors, especially the co-chairs of the committee, China and France, and vice-chair South Africa, for their commitment to help resolve Zambia’s debt overhang. We are also thankful to our multilateral partners, the International Monetary Fund, the World Bank and the African Development Bank, for their continuous support and substantial financial contribution to our development agenda.”

The next step is to secure a comparable agreement with our private creditors.”

“Our government committed to resolve the mounting debt suffocating our economy and we are proud of the immense progress we have made. Once completed, debt restructuring will free up resources vital for this government to invest in our development agenda: first generation reforms, investment in human capital and job generation to reinvigorate our economy and create opportunities for the Zambian people.”

DOWNLOAD COPY OF OUR STATEMENT HERE: https://www.mofnp.gov.zm/?wpdmpro=mou-agreed-with-occ

08/08/2023

14/07/2023

The Executive Board of the International Monetary Fund (IMF) has approved for the immediate disbursement of 189 million dollars under the Extended Credit Facility Arrangement.

This brings Zambia’s total disbursements under the Extended Credit Facility Arrangement to about 374 million dollars.

The facility seeks to support Zambia’s homegrown economic reform plan to restore macroeconomic stability and foster higher, more resilient, and more inclusive growth.

Source: ZNBC Today

The Executive Board of the International Monetary Fund (IMF) has approved for the immediate disbursement of 189 million dollars under the Extended Credit Facility Arrangement. This brings Zambia’s total disbursements under the Extended Credit Facility Arrangement to about 374 million dollars. The ...

07/07/2023

2023 IMF Africa Caucas Meeting

07/07/2023

QUESTION AND ANSWER ON: ZAMBIA REACHES AGREEMENT WITH OFFICIAL CREDITORS ON DEBT TREATMENT UNDER THE G20 COMMON FRAMEWORK.
___________________________________________________________________

On the 22nd of June 2023, the Government of the Republic of Zambia announced that it reached an agreement on a comprehensive debt treatment with its Official Creditors under the G20 Common Framework. This landmark achievement is a significant step towards restoring Zambia’s long-term debt sustainability. It complements the strong commitments from Zambia’s Multilateral Development Partners to support the country’s economic recovery through substantial concessional financing.

This page contains answers to frequently asked questions about the agreement. The Ministry will be providing more information to all stakeholders in due course. For further questions not addressed below, please address them to [email protected].

What is the agreement and what does it mean for Zambia’s debt restructuring?

Reaching an agreement on debt treatment with Zambia’s official creditors is an important milestone in the debt restructuring process. This agreement is expected to pave the way for the IMF Executive Board to approve the first review of the Fund-supported program in the coming weeks, allowing for the next tranche of IMF financing of about US$188 million to be disbursed. This financing will further bolster Zambia’s economic recovery and reform agenda.

What happens next?

Now that an agreement has been reached, the terms will be further described and formalized in a Memorandum of Understanding between Zambia and its official creditors, which will then be implemented through bilateral agreements with each member of the Official Creditor Committee.

This agreement also supports Zambia’s ongoing engagement with private creditors, including bondholders, with whom we remain committed to finding an agreement on comparable terms as early as possible to decisively resolve the issue of Zambia’s debt overhang. These productive conversations are ongoing, and we are hopeful that an agreement can be swiftly reached.

How much of Zambia’s debt has been written off?

The agreement covers $USD 6.3 billion in outstanding debt Zambia owes to its official bilateral creditors and delivers an economic reduction of close to 40%.

This is achieved through a significant maturity extension (with a final maturity beyond 2040representing an average extension by more than 12 years), and a reduction in interest rates. Interest rates will be set at only 1.0% during the next 14 years and will not exceed 2.5% thereafter under the baseline scenario.

The maturity extensions under the agreement will generate about $USD 5.0 bn in debt service savings between 2023 and 2031. Zambia will pay its official creditors about $USD 750m in the next decade, compared to close to $USD 6.0 bn that was due under our previous contractual arrangements.

The agreement includes an adjustment mechanism that provides for an accelerated repayment schedule (final maturity will be reduced by 5 years) and higher interest rates if Zambia’s capacity to service external debt improves in the future.

What does this debt restructuring agreement mean for the 2023 national budget?

Assuming the agreed terms are promptly implemented, the debt treatment is likely to reduce our budget deficit by about 1% of GDP. This will allow the Government to improve our fiscal trajectory and credit standing, thereby giving additional fiscal breathing space for the implementation of our development agenda.

This landmark agreement will also significantly alleviate Zambia’s debt servicing burden in the medium term, providing the fiscal space required to allocate more resources for critical public investments, particularly in areas such as healthcare, education, and infrastructure development.

This agreement is complemented by large new inflows of multilateral financing as part of our IMF programme, ensuring that every one of our international partners contributes to our economic recovery and enhanced economic resiliency

What did we agree to with China?

As Zambia’s largest official creditor, China played its part as a full member of the OCC under the same constraints as other creditors per the G20 Common Framework for Debt Relief. Zambia commends the leadership of China along with France and South Africa, acting as co-chairs and vice-chair of the Official Creditor Committee. The agreement applies uniformly to all our official creditors, and no state asset has been pledged as part of the agreement.

What does this proposal mean for the treatment of bondholders, both Euro and local?

Zambia continues to engage in constructive discussions with external private creditors with the goal of reaching a comparable agreement as soon as possible. The Government is encouraged by the progress made over the recent weeks with our private creditors and we hope to reach an agreement soon.

Domestic debt with respect to Treasury Bills and Bonds will not be restructured. This is essential to preserve financial stability and ensure a well-functioning domestic debt market.

With this debt restructuring agreement, can Zambia still borrow?

This agreement does not contain any specific additional restriction on Zambia’s future borrowing. We will continue to respect the conditions set under the IMF programme. The Government is committed to carrying out a prudent debt borrowing strategy, focusing on multilateral and domestic financing during our IMF programme. This deal will pave the way for a gradual and prudent return to other forms of external borrowing post-program, with the sole objective of meeting our development needs and growing the country’s export base.

https://www.mofnp.gov.zm/?p=7468

06/07/2023

WE ARE MORE RESOLUTE WITH OUR ECONOMIC TRANSFORMATION PROGRAMME - MUSOKOTWANE

Finance and National Planning Minister Dr SITUMBEKO MUSOKOTWANE, MP, has arrived on SAL ISLAND, CAPE VERDE (located off the coast of Senegal/West Africa), for the 2023 IMF and World Bank Africa Caucus on “new modalities and mechanisms for financing economic development in Africa, with special focus on public debt as a financing instrument for growth in Africa, climate finance for Africa, energy and private sector development.

Dr Musokotwane and his delegation were met on arrival last night by members of the Local Organizing Committee.

The Minister is accompanied to the Caucus by Ministry of Finance and National Planning Director for Economic Management - Mr. MULELE MAKETO MULELE, and Bank of Zambia Director – Financial Markets, Mr. ISAAC MUHANGA. The two-day (6th to 8th July, 2023) event has attracted delegates and speakers from across Africa, other continents, the International Monetary Fund (IMF), and the World Bank Group (WBG).

Therefore, apart from the customary occasions such as the official opening ceremony, some key events to be attended by Dr. Musokotwane and his delegation, include:

1)
The International Finance Corporation (IFC) roundtable on developing green and sustainable bond markets in Africa;

2)
Dialogue on Africa’s funding squeeze (based on a presentation to be made by Mr. Abebe Selassie - Director of the African Department at the IMF); and,

3)
Dialogue on public debt as a financing instrument for growth in Africa within the new global financial architecture.

Other sessions lined up for delegates will focus on themes such as formalizing the informal economy; unlocking climate finance for Africa; fostering energy financing for Africa; private sector development in Africa; and, a presentation on evolution of the WBG.

The outcome of the Caucus is the proclamation of the Sal declaration. On the sidelines of the Caucus, the Minister will take advantage of the presence of many other international organisations and high-level personalities to hold bilateral meetings.

In this regard, one of the bilateral meetings is with the Executive Director of the Economic Commission for Africa Mr. Pedro Antonio at which the parties are expected to dialogue on various areas of cooperation.

Reflecting on 2023 IMF and World Bank Africa Caucus, Dr. Musokotwane says Zambia has gone through stringent assessments in the on-going economic transformation and debt restructuring processes and was ready to share experiences with others.

“We have gone through stringent assessments in the on-going debt restructuring process. This has made us more resolute to remain on course with our economic transformation programme; sharper in our planning and implementation of developmental programmes; and, more articulate in ensuring that we remain on track in our obligations under the debt restructuring process, the IMF supported programme and in meeting the expectations of our citizens. We are here to learn more from others but we are also here to share our experiences,” acknowledged Minister.

Issued by:

(Original Copy Signed)

Ministry of Finance and National Planning, , Lusaka-Zambia

06/07/2023

Today we want to hear your understanding of debt restructuring. Drop us a comment and let's get interactive

05/07/2023

Debt Restructuring benefits as elaborated by Andrew Chibuye

Illustrated with the aid of a Venn Diagram… Debt restructuring: The benefits Zambia can realise…

The debt restructuring process has progressed. I’ve explained what has happened and I also provided an overview of what lies ahead.

That said… The 13.1 billion dollar question remains… What does all this mean for Zambia and Zambians?

Try as I might…I couldn’t help my self… I had to answer this question with the aid for a VENN DIAGRAM. You can mark my answer… hopefully I don’t get in trouble 👀

In my humble view, for this process to be deemed a success, impact must be felt at 3 levels:

1. Macro level - The country as a whole;

2. Micro level - In communities, constituencies etc;

3. Individual level - benefit to the Zambian citizen.

All three levels are important and need to be impacted positively for it to be successful. Some benefits are direct whilst others are indirect… some are immediate whilst others can only come in time.

Don’t get me wrong though, I am not suggesting that debt restructuring is the only factor that will drive the variables in the directions that I’ve illustrated. Not at all. However, we can hope for an acceleration. Important factors include:

1. Government policy adopted… for example, how will the cash flow relief from debt service be utilized?

2. The actions and reactions of the private sector… small and big businesses alike;

3. Ongoing support received from partners including donors and multilateral agencies;

4. The actions of Zambian citizens etc.

When writing this, I chose my words very carefully. Zambia “… benefits Zambia CAN realise…”

The task is to change “CAN” to “WILL”… Realisation is not automatic… There is work to do. Will the country seize the opportunity?

Let me put it this way, the effect of having the debt burden hanging over Zambia is the same as having your handbrake engaged when driving your car. There is drag or retardation created. Debt restructure is like the handbrake being released.

It’s like running a race with a weight on your back. You’re disadvantaged before the starting gun is fired. Debt restructure is like having that weight removed.

Hopefully that’s clear.

In the short, medium and long term:

Will the country accelerate? Decelerate? continue to move at the same speed? Or go into reverse?

Debt restructure is not necessarily the silver bullet that solves all of Zambia’s economic problems… But it’s one huge obstacle set aside.

The rest… is up to us as a people.

I rest my case

29/06/2023

/Economics Association of Zambia Forum on Zambia's Debt Restructuring & IMF Programme

27/06/2023

26/06/2023

Andrew Chibuye explaining debt restructuring in Bemba.. Tune in

24/06/2023

23/06/2023

Having trouble understanding Zambia's debt restructuring programme? Spare a minute and listen to Mutisunge Zulu as he unpacks every bit of Zambia's Debt Restructuring Deal

23/06/2023

Unpacking Zambia's debt restructuring deal.

23/06/2023

https://www.facebook.com/mafkenfmzambia/videos/1192099018102947/?sfnsn=wa&mibextid=irwG9G

23/06/2023

SET YOUR ALARMS!!

23/06/2023

A HAPPY MOMENT

HAKAINDE HICHILEMA WRITES:

Fellow citizens,

We are grateful for the efforts by the People’s Republic of China, as the Co-Chair of our Official Creditor Committee, for agreeing to restructure our . Yesterday in Paris, we expressed our profound thanks to His Excellency Mr. Li Qiang, the Prime Minister of the People's Republic of .

We requested that he conveys our sincere appreciation to His Excellency President Xi Jinping, with whom we have been engaging through various channels, for helping us reach this significant milestone yesterday.

We are fully aware that there is still a considerable amount of work ahead of us. Therefore, President Xi and ourselves have made a commitment to collaborate closely, building upon our strong and enduring all weather friendship, in order to benefit the people of both our nations and contribute to and development.

Hakainde Hichilema,
President of the Republic of Zambia.

23/06/2023

Catch Economist Trevor Simumba on Radio Phoenix today as he discusses Zambia's agreement on Debt Restructuring and what it means for the country. Time: 15:30 hrs. DON'T FORGET TO TUNE IN!!!

23/06/2023

WATCH Economist Noel Nkhoma as he discusses the IMF Debt Deal.

https://fb.watch/lkVPKslfOR/?mibextid=Nif5oz

23/06/2023

By Bright Chizonde,Financial Economist

ON IMPLEMENTATIONS OF ZAMBIA REACHING DEBT RESTRUCTURING AGREEMENT WITH OFFICIAL CREDITORS

This morning, the nation has awakened to the official great news that Zambia has reached a debt treatment agreement with Official Creditors under the G20 Common Framework.

What exactly does this mean? What are some of the economic implications?
Here are my thoughts:

1. This means Zambia is on course in implementing the IMF supported program. The staff-level agreement on the 1st Review of the program clearly spelt out that Zambia needed to get a debt restructuring agreement with the Official Creditors as the next milestone in the program. Having now achieved this, we can safely conclude that we are on course!

2. Zambia will now turn to the Private Creditors and is likely to succeed under this common framework. You see, the approach is to ask Official Creditors first to give up part of the debt, extend the repayment period and reduce the interest rate on the debt. Once this is done, the country then moves on to the Private Creditor, including the holders of the Eurobonds, to ask them to do the same. This is the whole point of the so-called “Common-Framework.” Therefore, this is exactly what Zambia will do and is likely to succeed.

3. Zambia will enjoy greater positive sentiments and investor confidence. Following this milestone, the IMF will issue a series of statements which will alert the international community that Zambia is doing better. This will trigger more interest and confidence in the Zambian economy, thereby increasing foreign investment in different sectors.

4. Macroeconomic Stability likely to improve. Owing to increased investor confidence, in the coming few months, Zambia is going to experience improved economic performance. Economic growth is likely to increase, FDI will increase and the Kwacha is likely to appreciate.

5. Improved Fiscal Position. With the now assured coming of the 2nd US$188 million, the Zambian government will have an improved fiscal position. If this money is used for budget support, we are likely to have more employment of teachers or medical professionals or increased CDF allocations in the 2024 National Budget.

22/06/2023

TODAY IS A BIG DAY FOR ZAMBIA AS WE REACH AN AGREEMENT WITH OUR OFFICIAL CREDITORS on a debt treatment plan. We are grateful for the support from our official creditors in resolving Zambia’s debt overhang that has been choking our . This agreement marks a crucial milestone in our country’s ongoing efforts to strengthen the economy and improve the quality of life for citizens. We will now drive forward to achieve a swift resolution with our private creditors and deliver opportunity and economic stability to the people of .

22/06/2023

TODAY IS A BIG DAY FOR ZAMBIA AS WE HAVE REACHED AN AGREEMENT WITH OUR OFFICIAL CREDITORS on a debt treatment plan. We are grateful for the support from our official creditors in resolving Zambia’s debt overhang that has been choking our . The agreement marks a crucial milestone in our country’s ongoing efforts to strengthen the economy and improve the quality of life for citizens. We will now drive forward to achieve a swift resolution with our private creditors and deliver opportunity and economic stability to the people of .

30/05/2023

MINISTER OF FINANCE URGES OFFICIAL CREDITOR COMMITTEE TO PROGRESS ON DEBT RESTRUCTURING

22/05/2023

https://www.facebook.com/100064321706641/posts/pfbid02Y75zm6F5WT74cSZ1sB7qwsNrPthf5Q7nKcp5ModYWY4F9gKTgGG8he8ovN1sGzBAl/?mibextid=Nif5oz

INVEST IN GOVERNMENT SECURITIES - For more information, visit:

https://boz.zm/bonds-and-tbills.htm

http://www.mofnp.gov.zm/?page_id=4072

10/05/2023

PRESIDENT HAKAINDE HICHILEMA ARRIVES IN PARIS FOR DEBT RESTRUCTURING TALKS

PRESS RELEASE

For Immediate Release

Paris-Tuesday May 9th ,2023

President Hakainde Hichilema has arrived in Paris, France for a one-day official visit aimed at accelerating efforts towards a comprehensive Zambia’s debt restructuring plan.

Mr. Hichilema is accompanied by Finance Minister Situmbeko Musokotwane, Foreign Affairs Minister Stanley Kakubo and senior government officials.

The President was received by Her Excellency Ambassador of the Republic of Zambia to France Dr. Christine Kaseba Sata, diplomatic and local staff as well as representatives from the Zambia-France Friendship Association.

He is expected to hold bilateral talks with his French Counterpart Emmanuel Macron on Wednesday.

The meeting will focus on Zambia’s debt restructuring programme and explore areas of increasing trade and investment between the two countries.

The President is looking forward to a debt treatment plan with favourable terms to put Zambia’s public debt on a sustainable path.

Mr Hichilema has undertaken a number of economic reforms aimed at reviving the economy and his diplomatic drive to Paris is crucial to ensure the effectiveness and speedy resolution of the debt restructuring programme.

France is a member and host to Paris Club of Creditors - a group of official creditors whose role is to find coordinated and sustainable solutions to the payment difficulties experienced by debtor countries.

She is also the co-Chair of the Creditor Committee handling the debt restructuring programme for Zambia

The Paris Club of Creditors and the G20 have been discussing Zambia’s debt restructuring under the Common Framework beyond the Debt Service Suspension Initiative (DSSI)

Issued by:
Naomi Ng'andu Mweemba
First Secretary Press and Public Relations
Embassy of Zambia, Paris.

06/05/2023

IMF MATTERS

https://www.reuters.com/world/africa/imf-head-sees-disbursement-zambia-soon-kenya-unlikely-default-2023-05-05/

(c) Reuters