BUUMBA CHIMBULU writes
GOVERNMENT’s solicitation to suspend coupon payments should not be treated as a default because it is part of the debt management strategy Zambia has embarked on with the help of Lazard Freres Gestion of France.Zambia in May this year hired Lazard Freres Gestion of France for US$5 million to restructure its US$11.2 billion foreign debt over a three year period, a 0.05 percent of the entire foreign debt portfolio.The move was positively received by the market, says Economics Association of Zambia (EAZ) president, Lubinda Haabazoka.Dr Haabazoka explained that the public solicitation was part of the procedure any bond issuer had to go through in the current circumstances.
He said in a statement that the markets and citizens should therefore not treat the current solicitation to suspend coupon payments as a default.
“EAZ is encouraged that the Zambian government has joined other countries in implementing measures aimed at cushioning the negative economic effects of COVID-19 among which is debt management,” Dr Haabazoka said.EAZ, he said, was impressed with the appointment of Lazard Freres as financial advisor to help restructure Government’s external debt as the practice was around the world for countries with bonds actively trading on the international capital markets.Dr Haabazoka indicated that Zambia was not the only emerging market undergoing the same procedure.He also said Government would still trade business as usual should the bond holders refuse to suspend coupon payments.Dr Haabazoka encouraged the general public to take keen interest in what was happening around debt management in Zambia.He also warned the public not to be speculative as issues to do with commercial debt or bond markets were highly sensitive to market information.
“Earlier this year, we called upon Government to immediately engage its global partners in the aim of suspending certain multilateral debt payments and negotiating for easing down conditions especially on commercial debt as practiced by similar countries,’ he said.