Zambians Celebrate The Beginning Of A New Post-Debt Chapter

Lusaka residents lined the Great East Road in anticipation of President Hakainde Hichilema returning to the capital after his momentous visit to France. While at the Summit for a New Global Financing Pact in Paris, President Hichilema witnessed the restructuring of Zambia’s debt. President Hichilema said he was “humbled by your thunderous welcome”.

The deal involved public sector creditors agreeing to reschedule $6.3 billion of debt, and that private sector creditors will also reschedule the $6.8 billion they are owed. A three-year grace period means that, until 2026, Zambia must only make payments on the interest due, rather than the debt itself. The debt is to be paid off by 2043, an extension of 12 years, and until 2037 Zambia will pay interest rates capped at 1% - having been paying as much as 3.9% on Chinese loans in 2023. Since Zambia’s economy has over-performed in 2023, the agreement includes a clause allowing higher voluntary interest payments to accelerate debt repayment in anticipation of continued financial success.

President Hichilema told a crowd of hundreds at Lusaka’s Kenneth Kaunda International Airport that the deal was “an impossible task […] zigzagging, sideways, forward and backward, down and up […] but we kept our eyes on the ball”. Mr. Hichilema had on Friday celebrated Zambia returning to “the Champions League”; he continued the football theme by sharing an image of him scoring, captioned “Kicking off the week on a high note. Let’s strive for progress and a better future for Zambia”.

Residents waved and cheered as the presidential motorcade passed, celebrating what is hoped to be a turning point in Zambia’s recovery since becoming the first African nation to default on its debt post-COVID-19. France President Emmanuel Macron, who was a key figure in the talks, called the $13.1 billion economic milestone “a historic achievement”, for Zambia’s economy and for the hopes of other nations facing financial struggles.

The restructuring deal also means that the conditions of an agreement with the International Monetary Fund have been met, allowing the organisation to release funding of $188 million to Zambia. The disbursement means that Zambia has so far received approximately $376 million of the $1.3 billion package of funding from the IMF, an enormous boost to what the organisation described as “robust growth”, despite the impact of debt, in April 2023. IMF Managing Director Kristalina Georgieva reacted to the news of the deal in a statement which praised Zambia’s initiative in the past year to prove it was a worthy candidate for restructuring.

President Hichilema waved back at the cheering residents, as they sang and chanted their support for Mr. Hichilema. The president addressed Zambian citizens on social media on Saturday, saying, “I stand before you as the President of Zambia, humbled and inspired by the potential that lies within our great nation”. He added, “the debt restructuring agreement […] I firmly believe, will be a game changer for Zambia, setting us on a transformative path towards sustainable development, prosperity, and economic sovereignty”. President Hichilema said the deal “set the benchmark for debt resolution under the Common Debt Treatment Framework”.

Financial stability will encourage potential investors, many of whom have expressed great interest in Zambia’s promise but had reservations due to debt and resulting economic instability. Mr. Hichilema commented, “we will rebuild confidence in our economy, attract foreign investment, and unlock the potential of our natural resources”.

As the president made clear in his public address, the primary sectors that will enjoy the benefits of new financial development will be “education, healthcare, infrastructure, and job creation”, as part of Mr. Hichilema’s vision of “shared prosperity for all Zambians, and most importantly human capital development, which is the cornerstone of any 21st century nation”.

Zambia’s Civil Society for Poverty Reduction (CSPR) commended the government’s efforts. CSPR representative Partner Siabutuba said that it “is not an achievement for the United Party for National Development or President Hakainde Hichilema, it is an achievement for Zambia. We think this is a very good thing and any opposition political party worth their salt cannot fail to recognise this important milestone”.