Zambia’s debt has a strong bearing on the stability and performance of the local currency, Kwacha and according to economists this in turn, impacts the lives of citizens in Zambia.
As stated by analysts, Zambia’s debt is contracted in foreign currency and this means that, if the local currency weakens, the amount owed to creditors increases.
Apparently, high debt servicing charges weaken the economy by forcing the government to spend more money on interest payments than national development.
Meanwhile, China recently urged Zambia’s private creditors to join Beijing in discussing the African nation’s debt after official creditors agreed to a restructuring of what it owes.
The Chinese Ambassador to Zambia, Du Xiaohui, made this plea on Thursday after government and internal body lenders pledged to negotiate a restructuring of the country’s debts.
The move was accepted by International Monetary Fund managing director Kristalina Georgieva who said it was “clearing the way” for a $1.4 billion fund programme.
The creditor committee, co-chaired by China and France, also implored private creditors to make “committments without delay” to negotiating debt relief on terms at least as favourable.