LUSAKA, Zambia – 27 June 2023 – Zambia Civil Society Organisation (CSO) Debt Alliance is a consortium of likeminded Civil Society Organisation that Seek to Provide a Platform for Consolidated Policy Engagements on Public Debt and Finance Management in Zambia. The Alliance was Established in September 2020 and Today the Organisation Hosted a Media briefing on the Debt Restructuring Agreement that Zambia Received.
Speaking at the press briefing held at Centre for Trade Policy and Development (CTPD) offices in Olympia today, Zambia Civil Society Debt Alliance Chairperson, Fr. Alex Muyebe said that, Zambia attainment for debt restructuring agreement marks a remarkable milestone, considering the challenges encountered during its debt restructuring process.
“Despite getting on an International Monetary Fund (IMF) program in September 2022, the country faced several obstacles that impeded progress. The delay in financing this agreement has had adverse effect on inflation and exchange rates. It also highlighted the cost of living, which has average above ZMW7, 000.00 for a family of five in the country. This according to the basic needs and nutrition basked as calculated by Jesuit centre for theological reflection (JCTR). Moreover, Zambia had diligently met all the structural benchmark and performance criteria during the initial six months of being on an IMF program. However, the second disbursement of program funds was contingent upon closing in on a debt restructuring deal and signing a memorandum of understanding (MOU) with the official creditors. As such, any further delays reaching such an agreement would have significantly impacted this year’s budget implemented and jeopardized the overall success of Zambia’s IMF reform program. Fr. Muyembe Explained.
According to the press statement, Fr. Muyembe further said that, the Civil Society Organisation Debt Alliance believes that, this agreement not only supports Zambia’s IMF programme but also paves way for reducing Zambia’s risk of debt distress to ‘moderate’ status, ultimately leading to long-term debt sustainability.
“We argue that, this agreement will allow for a 3-years grace period, in which interest payments will be made before the country resumes making principle payment obligations. Such a development is crucial in enhancing the countries fiscal space for essential social sector spending and redirecting Zambia towards a more resilient and inclusive growth trajectory. This will significantly improve the lives of Zambians and foster sustainable development. We are optimistic that, this achievement will open up new opportunities for Zambia by significantly boosting investors’ confidence both domestically and international, attracting the much-needed foreign direct investment and hence, promoting entrepreneurship and job creation which are key for stimulating economic growth”. Fr. Muyembe added.
In a long run, Fr. Muyembe said that, Zambia sets a precedent for other indebted developing countries seeking debt restructuring. It goes beyond to demonstrate the feasibility of debt restructuringunder the G-20 common framework. It will also inspire transparent, fair and inclusive negotiations whilst emphasising the role of international cooperation in resolving global financing challenges.
The debt alliance understands the bulk of work that lies ahead before signing the memorandum of understanding with official creditors, hence, the government should be transparent and consultative as they begin engagements with the private creditors. It will also be important for the government to step up efforts towards unlocking sectors that can help contribute towards domestic resource mobilisation as this is a more sustainable path towards financing the country development aspirations going forwards. As such, the 3 years grace period should be utilised to prioritize investments in productive areas that will be key raising the much-needed revenues.
In summing up, Fr. Muyembe winded up by saying that, the Civil Society Organisation (CSO) Debt Alliance remains committed to advocating for transparency, accountability and responsible debt management in the country and as the organisation eagerly look forward to gaining a comprehensive understanding of the terms outlined in the memorandum of understanding with official creditors, the organisation urge private creditors to act with same principle to restructure the $6.5 billion speedily in order to allow the country have a full appreciation of the debt restructuring process. Lastly, the organisation remains committed to workingwith the government and other stakeholders to ensure a brighter and more inclusive future for all Zambians.