Government Confirms Appointment Of Debt Management Specialists
Government has this week confirmed the appointment of French firm Lazard Freres for advisory services relating to liability management of its debt portfolio.
The move comes after Government determined to seek support in restructuring its debt and manage loans scheduled to mature in the coming months and years. Among the debts are the Eurobonds, which will see around US$750 million debt mature in 2022, followed by US$1 billion in 2024 and US$1.25 billion between 2025 and 2027.
According to a statement previously issued by Secretary to the Treasury Fredson Yamba Lazard Freres was selected from a list of six bidders and the contract will be worth a maximum of US$5 million for work done over a period of three years.
The move, and in particular the cost, has come under scrutiny, with some arguing the money could be better spent. While acknowledging the importance of such an exercise UPND leader Hakainde Hichilema was among those to offer his services to the Government for free in connection with debt restructuring. He called on Government to instead give the US$5 million to youth and women empowerment programmes.
In a statement this week released by Special Assistant to the President Isaac Chipampe the appointment was confirmed and the move defended.
“Cabinet is of the view that, to ensure successful negotiations with creditors, it is necessary that Government engages the services of reputable financial and legal advisory firms with experience in providing advisory services in relation to the liability management of debt portfolios including options for debt cancellation, refinancing, re-scoping and postponement of some of the projects,” Chipampe explains.
“Lazard has also provided advisory services to some countries in Europe, Latin America and a number of African countries and private sector entities,” he continued
In February of this year Minister of Finance Bwalya Ng'andu confirmed that external debt stock continues to rise and now stands at US$11.2 billion. The debt has increased almost 6-fold from just US$1.9 billion in 2011.
Cabinet also this week approved plans to issue a Covid bond to the value of K8 billion as a means of financing economic stimulus. Zambia’s estimated revenue for 2020 is predicted to fall by at least 20%, or K14.8 billion, as a result of Covid-19, Finance Minister Bwalya Ngandu has previously stated.
Government last week asked the Paris Club of creditor nations to suspend principal and interest payments on its debts to all official creditors until the end of December.
Zambia has been listed among countries eligible for debt relief under the Debt Service Suspension Initiative, which aims to help nations respond to the health challenges and economic shocks of the Covid-19 pandemic.