EAZ Warns on Eurobond Repayment

As Minister of Finance Margaret Mwanakatwe and her team have been desperately seeking to reassure international investors in the US and Europe that the government does not have hidden debts and is in control of its own finances, the Economics Association of Zambia (EAZ) has sounded a warning regarding the strain that Eurobond repayments will have on the already overburdened economy.

Eurobonds dating from 2012 and 2014 are worth US$750 million and US$1 billion and are set for repayment in 2022 and 2024. A further Eurobond worth US$1.25 billion must be repaid between 2025 and 2027.

EAZ President Dr Chrispin Mphuka joins other commentators, including Zambian trade and investment expert Trevor Simumba, in calling for improved transparency regarding debt levels. Dr Mphuka is also among those to have previously called for a Sinking Fund to ensure preparation for these payments.

Addressing the confusion regarding external debt figures, Dr Mphuka is quoted as stating: “I think there is need, really, for government to be more transparent on these debt figures because it seems no one knows what the true picture is. And the statistics don’t seem to be forthcoming so we hope that there can be a much comprehensive detailing of what the final debt figure is for Zambia. Everyone is anxious to know what it really is.”

While the Minister of Finance recently revised the official debt figures upwards, the totals were still labelled as preliminary and appear to differ from those indicated by IMF representatives, which may explain some of the delay and difficulty government has had in advancing conversations regarding a bail out package.

Meanwhile the European Union has signed a funding agreement worth €17million with the Zambian government for investing in improved public financial management.