Zambia's Debt Restructuring Under G20 Common Framework

 
1
 
Zambia’s Position
 
Presenter:
 
Mr. Peter N Mumba
 
Debt Management in
Zambia
 
Moratorium (suspension) on debt service payments 
from 2020 pending
comprehensive debt restructuring.
International Monetary Fund Program: 
36 months and at a value of US$1.4
billion
Debt Restructuring: 
Zambia hopes to restructure US$12.8 billion in order to
improve its debt carrying capacity.
Public Debt Management Act – 
Promote Responsible Borrowing
 Medium Term Debt Strategy
 Annual Borrowing Plan
Debt Management Office
Sinking Fund
More transparency (Quarterly engagements with MoF, BoZ, GRZ)
Enhanced Accountability and transparency Oversight
 
Debt Restructuring – 
Under the G20 Common Framework
 
Managed to restructure US$ 6.3 Billion of Official Creditor
(0CC) Debt.
A Memorandum of understanding between OCC and
Creditors was finalized with China and India signing in
March this year.
Managed to restructure in principle our US$ 3 billion
Eurobond debt.
What remains is to restructure the remaining US$ 3 billion
Private creditor debt.
 
Movements in Public
Debt
 
 
Zambia’s Current
Debt Position
According to the
Ministry of Finance and
National Planning,
Zambia’s total debt
burden increased from
US$19.8 billion in 2020
reaching US$22.7
billion at the end of
2021 and US$25 billion
at end of 2023 as shown
in the table
 
Debt Restructuring – 
Under the G20 Common Framework
 
Significant maturity extensions of our existing debt by
more than twelve years with final maturity in the year
2043.
Principle repayments are starting in 2026, three years from
now, however, only for 0.5 per cent of the debt stock per
annum for the period 2026 to 2035
Zambia was supposed to pay 
US$6.3 billion 
over the
period. With agreement over the next ten years, US$ 750
million will be paid while without the agreement, we would
have had to pay a US$6.3 billion.
It generates 
US$5.8 billion 
in debt services saving which
unlock resources that can be utilized for our developmental
programmes.
 
Debt Restructuring – 
Under the G20 Common Framework
 
Some risks include:
Resumption of debt servicing (E.g 
US$75 million down
payment on the date of exchange of bonds
; 
US$187 million in
June 2024 
& 
US$79 million in December 2024).
El Nino – This has created a financing gap of about US$ 900
million. Hence, the budget needs revision & It has also
contributed to a 700-mega watt power deficit in the country.
(Risks around copper production, SME’s and Food security).
Depreciating Kwacha & Inflation – BoZ Continues to embark
on a tight monetary policy stance (Under performance of
Bonds and Treasury Bills Offer – Risk to budget financing).
Rigidities in the caused by the country’s IMF programs – E.g.
inflexible inflation target, reserves, austerity measure
(subsidies & cost reflective energy tarrifs).
 
Debt Restructuring – 
Under the G20 Common Framework
 
What to look out for:
June debt service payment
Revised budget – Gender responsive interventions
June meeting for Eurobond Holders – To vote on the
restructuring proposal.
Investments/ performance in the mining sector – key for
revenues
Protection of SME’s
Monitoring of IMF program reforms
 
 
Major take aways
from the IMF Program
 
Enhance Domestic Resource Mobilisation – 
Various Tax Reforms
Fiscal Consolidation
Pursues contractionary Fiscal Policy  
- 
The size of the Budget   is
planned to contract to 33 percent in 2025 from 37 percent in
2022.
Pursues contractionary monetary policy 
- 
The IMF Programme
obsesses with price stability by keeping inflation between 6-8%.
Push towards cost reflective energy tariffs 
- 
 Tariffs to rise by an
average of 17 percent between 2020 and 2025 (E.g Fuel Pump
prices).
Enhanced Social Sector Spending
Restoring Debt Sustainability
 
Advocacy for
Transparency and
Accountability
 
PUBLIC INTEREST 
(Public Debt Management Act, the Public Finance
Management Act, the Auditor General’s Report on Public Debt),
Adherence to Annual Borrowing Plans (Auditing).
Adherence to Medium Debt Management Strategy (No non
concessional debt)
Establishment of the Debt Management Office
Operationalisation of the Sinking Fund
Transparency on Loan Conditions and Terms (Drought financing)
 
 
Thank You!
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Zambia is undergoing debt restructuring to address its high debt burden, with efforts including moratorium on debt service payments, involvement in the G20 Common Framework, and significant maturity extensions on existing debt. The country aims to improve its debt carrying capacity and unlock resources for developmental programs through these measures.


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  1. Zambias Position Presenter: Mr. Peter N Mumba 1

  2. Debt Management in Zambia Moratorium Moratorium (suspension) (suspension) on on debt debt service service payments payments from 2020 pending comprehensive debt restructuring. International International Monetary Monetary Fund Fund Program Program: : 36 months and at a value of US$1.4 billion Debt Debt Restructuring Restructuring: : Zambia hopes to restructure US$12.8 billion in order to improve its debt carrying capacity. Public Public Debt Debt Management Management Act Act Promote Responsible Borrowing Medium Term Debt Strategy Annual Borrowing Plan Debt Management Office Sinking Fund More transparency (Quarterly engagements with MoF, BoZ, GRZ) Enhanced Accountability and transparency Oversight

  3. Debt Restructuring Under the G20 Common Framework Managed to restructure US$ 6.3 Billion of Official Creditor (0CC) Debt. A Memorandum of understanding between OCC and Creditors was finalized with China and India signing in March this year. Managed to restructure in principle our US$ 3 billion Eurobond debt. What remains is to restructure the remaining US$ 3 billion Private creditor debt.

  4. Movements in Public Debt

  5. Type of Debt Amount (US$ Millions) Zambia s Current Debt Position Total Public Sector Debt 25,033.34 Central Government External Debt 14,572.92 According to the Ministry of Finance and National Planning, Zambia s total debt burden increased from US$19.8 billion in 2020 reaching US$22.7 billion at the end of 2021 and US$25 billion at end of 2023 as shown in the table Guaranteed State-Owned Enterprises external Debt 1,407.14 Non-Guaranteed External Debt Fully Re-paid Central Government Domestic Debt 9,053.28 Private Sector External Debt 8,023.60 Total External Arrears 6,379.87 Total Domestic Arrears 3,704.43

  6. Debt Restructuring Under the G20 Common Framework Significant maturity extensions of our existing debt by more than twelve years with final maturity in the year 2043. Principle repayments are starting in 2026, three years from now, however, only for 0.5 per cent of the debt stock per annum for the period 2026 to 2035 Zambia was supposed to pay US period. With agreement over the next ten years, US$ 750 million will be paid while without the agreement, we would have had to pay a US$6.3 billion. It generates US US$ $5 5. .8 8 billion billion in debt services saving which unlock resources that can be utilized for our developmental programmes. US$ $6 6. .3 3 billion billion over the

  7. Debt Restructuring Under the G20 Common Framework Some Some risks Resumption of debt servicing (E.g US$75 million down payment on the date of exchange of bonds; US$187 million in June 2024 & US$79 million in December 2024). El Nino This has created a financing gap of about US$ 900 million. Hence, the budget needs revision & It has also contributed to a 700-mega watt power deficit in the country. (Risks around copper production, SME s and Food security). Depreciating Kwacha & Inflation BoZ Continues to embark on a tight monetary policy stance (Under performance of Bonds and Treasury Bills Offer Risk to budget financing). Rigidities in the caused by the country s IMF programs E.g. inflexible inflation target, (subsidies & cost reflective energy tarrifs). risks include include: : reserves, austerity measure

  8. Debt Restructuring Under the G20 Common Framework What What to to look June debt service payment Revised budget Gender responsive interventions June meeting for Eurobond Holders To vote on the restructuring proposal. Investments/ performance in the mining sector key for revenues Protection of SME s Monitoring of IMF program reforms look out out for for: :

  9. Major take aways from the IMF Program Enhance Enhance Domestic Domestic Resource Resource Mobilisation Mobilisation Various Tax Reforms Fiscal Fiscal Consolidation Consolidation Pursues Pursues contractionary contractionary Fiscal Fiscal Policy Policy - The size of the Budget is planned to contract to 33 percent in 2025 from 37 percent in 2022. Pursues Pursues contractionary contractionary monetary monetary policy policy - The IMF Programme obsesses with price stability by keeping inflation between 6-8%. Push Push towards towards cost cost reflective reflective energy energy tariffs tariffs - Tariffs to rise by an average of 17 percent between 2020 and 2025 (E.g Fuel Pump prices). Enhanced Enhanced Social Social Sector Sector Spending Spending Restoring Restoring Debt Debt Sustainability Sustainability

  10. Advocacy for Transparency and Accountability PUBLIC INTEREST (Public Debt Management Act, the Public Finance Management Act, the Auditor General s Report on Public Debt), Adherence to Annual Borrowing Plans (Auditing). Adherence to Medium Debt Management Strategy (No non concessional debt) Establishment of the Debt Management Office Operationalisation of the Sinking Fund Transparency on Loan Conditions and Terms (Drought financing)

  11. Thank You! Thank You!

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