Govt Appoints Debt Advisors For US$5 Million

The Government has confirmed the selection 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 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. 

In the statement, which provides unsuccessful bidders with an opportunity to contest the decision, Yamba reiterates that the Government will not unilaterally restructure its debt obligations stating, “I take this opportunity to restate that the Government has no intention of unilaterally restructuring debt without consulting creditors. We will respect agreements and diligently use market-based instruments in our debt management.”

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. 

Domestic arrears stood at K26.2 billion in September 2019 and concern remains regarding Zambia’s high levels of debt, which reached 80% of GDP by the end of 2019 as compared with 35% in 2014.

Organizations such as the African Development Bank have warned that the country is at high risk of debt distress and the Economics Association of Zambia President Lubinda Haabazoka has previously warned that servicing the debt would cost around US$800 million in 2019.