The Zambia Civil Society Organisation Debt Alliance urges the government to provide a comprehensive update on the ongoing debt restructuring negotiations with the remaining non-bonded commercial creditors.
In a statement today, CSO DEBT ALLIANCE Coordinator Peter Mumba said while recognising the progress made in restructuring debt, the Alliance acknowledges the complexities of negotiating with these creditors, particularly the risk that they may seek to secure more favourable terms compared to other creditors, potentially complicating the overall debt restructuring process.
He said despite restructuring 77% of its US$13.4 billion restructuring perimeter, Zambia is yet to finalise negotiations with its non-bonded commercial creditors, who hold over US$3 billion of the country’s debt.
Mr. Mumba noted that these creditors consist of several international banks, asset managers, and hedge funds from countries such as China, the United Kingdom, Israel, and South Africa, as well as international financial institutions like the African Export-Import Bank.
He said although Zambia has been restructuring its debt under the G20 Common Framework, there are notable differences in how various creditor groups are engaged.
And Mumba said as the government prepares to present the 2025 national budget next week, the Debt Alliance has key expectations and these include outlining concrete steps and setting realistic timelines for concluding negotiations with non-bonded commercial creditors.
He added that the budget should align with the objectives of the Medium-Term Debt Management Strategy, which emphasize prioritizing concessional financing and gradually reducing the Debt-to-GDP ratio towards the 2027 target of 65%.
Mr. Mumba said it is also crucial for the budget to allocate sufficient resources for debt servicing, particularly for restructured Eurobonds and other existing multilateral loans.
“For instance, official creditors and Eurobond holders generally follow a unified and coordinated approach, requiring the formation of committees such as the Official Creditor Committee (OCC) and an ad hoc bondholder steering committee. Meanwhile, negotiations with commercial non-bonded creditors often follow an individual and case-by-case basis as opposed to engaging collectively. This makes it relatively more challenging to negotiate and align restructuring terms with the Common Framework’s principle of comparability of treatment. Moreover, one of the commercial non-bonded creditors was flagged in the recently published Special Auditor General’s report on external debt, citing issues of over overpricing, expired contracts, non-delivery of goods, irregular charges, and questionable procurement practices. This raises uncertainty around their inclusion in the restructuring perimeter. Therefore, in as much as finalising these negotiations remains important in completing Zambia’s debt restructuring process, timely and detailed updates are also essential to offer a clear understanding of the challenges and opportunities that lie ahead. Such transparency promotes informed policy debate, helps manage public expectations, and garners public support for the government’s ongoing efforts.” Mr. Mumba said
