CSO DEBT ALLIANCE CALL FOR CONCLUSION OF DEBT RESTRUCTURING TALKS.
CSO DEBT ALLIANCE CALL FOR CONCLUSION OF DEBT RESTRUCTURING TALKS
The Civil Society Organization Debt Alliance (CSO-DA) through its members ActionAid and the secretariat the Centre for Trade Policy and Development (CTPD) has engaged the ministry of finance to quicken the debt restructuring efforts that Zambia is pushing with international creditors.
A dialogue meeting was held in Lusaka today where the ministry of Finance took the opportunity to clarify some of the background issues concerning the debt restructuring that apparently seem to have delayed.
A team of senior economics from the Ministry of Finance spoke at length on why the milestone gained so far towards debt restructuring and the possible effects of the prolonged delays.
Vivian Lubasi, Chirwa Mudolo and Chisha Chola explained that the Key contributing factors to increased debt include extensive borrowing for infrastructure projects, weak controls and limited parliamentary oversight during debt contraction.
On guaranteed and non-guaranteed external debt, the ministry explained that in the quarter one of this year, the Stock of Government Guaranteed (SOE) external debt reduced by 1.39 percent, to USD1,434.12 million from USD1,454.37 million at end quarter four of 2022. The reduction was mainly attributed to principal repayments amounting to USD18.13 million.
The SOE external debt reduced by 90.62 percent to USD8.54 million at end quarter one of 2023, from USD91.04 million at end quarter four of 2022. The reduction is due to debt service payments amounting to USD82.49 million, out of which US$ 80.31 million is an early settlement to China Export Import Bank.
The milestones made towards debt restructuring include the formation of the Official Creditor Committee for Zambia (OCC) who have held three meetings to date
Other milestones include: Provision of financing assurances to the IMF which paved way for approval of the USD 1.3 billion Extended Credit Facility for Zambia and the first disbursement of the Extended Credit facility (ECF) amounting to USD 182 million received in September 2022
The rest are the first program review in April of 2023 which reveals that Zambia has met all the structural benchmarks as well as the quantitative performance criteria agreed to for the 2022 fiscal year.
Multilateral Development Banks such as the African Development Bank and the World Bank have come on board with budget support over the remainder of the program period in form of grant financing. This reduces the anticipated debt service obligations and provides much needed relief to the fiscal over the program period.
On the Public Debt Management, the ministry of finance is optimistic that the revised Act would help minimise debt contraction for the country.
They submitted that under the revised Act only the Minister of finance would be allowed to contract a debt on behalf of Zambia.
CSO-DA representative Isaac Mwaipopo who is also CTPD Executive Director urged stakeholders to appreciate and engage the ministry of finance frequently in raising issues of debt in the country.
The alliance commended the ministry finance for the timely disbursement of information to the public and hoped other ministries could emulate.
Stakeholders also raised concern of the consequences of the delayed approval of the debt restructuring agreement on public service provision of the general economic welfare of the population.
Geofrey Sizala who represented ActionAid Zambia called for enhanced consultations and engagement between the CSOs and the government.
He also urged stakeholders to submit tax proposals to the ministry of finance.
Central Government external debt stock increased by 0.96 percent to USD 14,093.18 million as at end quarter one 2023 from USD 13,959.59 million as at quarter four, 2022. This was mainly driven by new disbursements from multilateral creditors which accounted for the largest increase in the debt stock.