The successful restructuring of Zambia’s external debt will deliver benefits to the nation especially MSMEs
Zambian President Hakainde Hichilema oversaw the conclusion of the debt restructuring process for Zambia’s external debt at a summit in Paris. The details of the restructuring are that Zambia’s debt will be extended to a period of 20 years with a grace period of 3 years in which only interest payments will be made.
This achievement allows the International Monetary Fund (IMF) to give Zambia a further US$188 million as part of the 1.3 billion agreement signed in September 2022.
ZCGS is confident that this achievement will result in improvements in the interest rates, exchange rate and inflation.
ZCGS Chief Executive Officer, Mary Mumba revealed that the delayed conclusion of the debt restructuring process has had adverse impacts on the key economic variables in the past two years. She cited interest rates as an example and stated that Bank of Zambia has been forced to increase the policy rate in an attempt to keep the exchange rate and other variables in check. This has resulted in the increase in commercial interest rates with MSMEs being ultimately affected.
It is therefore hoped this landmark achievement will open the economy and give commercial banks more confidence to lend to MSMEs with MSMEs also thriving in a better economic environment.