DODIA URGES GOVT TO ENGAGE MULTILATERAL CREDITORS

ECONOMIST Yusuf Dodia says Zambia must approach the multilateral creditors which includes the World Bank, European Union (EU) and the Development Bank to discuss debt restructuring.

Speaking in an interview, Mr Dodia added that the country must engage bilateral creditors such as China, India and South Africa where it has direct support programmes in forms of loans and begin to negotiate the re- structuring of the debt payment system.

“The first attempt was to engage France President Macron of the Credit Committee and the G-20 and they came up with the agreement that US$ 6.34 billion will be restructured. The technicalities of this (agreement) are yet to be shared with the public. We are not sure how far it has gone,” Mr. Dodia said.

He said the second mechanism was to look at   restructuring the US$ 3.8 billion which was owed to commercial creditors as a result of issuing Eurobond or Dollar bonds in 2012, 2014, and 2015.

“That particular mechanism was rejected by creditors because they wanted their money. So, we don’t know where we are going with that issue,” he said.

Mr. Dodia said the third approach was to speak to the bilateral creditors, noting that the Government was yet to finalise arrangements with China and India to restructure the debt the country has with them.

He said that is the direction the country must go and must move very quickly.

“The reason we need to move quickly is that in 2022, we allocated K78 billion towards debt servicing when no restructuring had been signed. In 2023, when we had some debt restructuring activities taking place, when Zambia was able to draw some money from the IMF to finance some of the restructuring. We allocated K48 billion towards debt servicing, a drop of K30 billion from the previous year.

“Now in 2024, when we have now done the second draw from IMF 1.3 billion over three years, we have now reduced the allocation of debt servicing to K38 billion out of the K180 billion budget. So, clearly we are reducing it all the time,” he said.

According to Mr Dodia, the reductions could only make sense if the debt had been restructured adding that if the country failed to restructure debt, it would go back to the K78 billion which was left three years ago and that would squeeze the Zambian economy.

He said it was very imperative that the country resolved the issues of debt restructuring and put the country on the road to prosperity and the road to funding the budget 100 percent by local tax collection by Zambia Revenue Authority(ZRA).

He added that there was a need for the country to generate more resources to service foreign debt which stood at US$ 16 billion and local debt which was over K200 billion.

And Mr Dodia said the Zambian Government must be critical of the International Monetary Fund (IMF) programmes and ensure that they contributed significantly to the welfare of the country.

He said Zambia must make sure that the IMF programmes were designed in a way that they benefited the Zambian people.