LUSAKA (The Business Telegraph): The Paris Club under the Debt Service Sustainable Initiative – DSSI have extended debt service reprieve to Africa’s second largest copper producer Zambia for the period 01 May to 31 December. This was contained in a press release from the Paris Club dated 10 August. A total of 41 nations of the 73 eligible have nodded this offer of which 28 are African nations.
“In application of the term sheet of the Debt service suspension Initiative (DSSI) also endorsed by the G20, the Paris Club recognized that the Republic of Zambia is eligible to benefit from the initiative. Therefore, the representatives of the Paris Club Creditor Countries have accepted to provide to the Republic of Zambia a time-bound suspension of debt service due from 1st May to 31st December 2020.
The Government of the Republic of Zambia is committed to devote the resources freed by this initiative to increase spending in order to mitigate the health, economic and social impact of the COVID19-crisis. The Government of the Republic of Zambia is also committed to seek from all its other bilateral official creditors a debt service treatment that is in line with the agreed term sheet.
This initiative will also contribute to help the Republic of Zambia to improve debt transparency and debt management.
Paris Club creditors will continue to closely coordinate with other stakeholders in the implementation phase of this initiative, in particular when considering a possible extension of the suspension period,” the press release read.
Zambia’s strides so far. As COVID risk deepen Zambia seeks a Rapid Credit Facility – RCF with the Washington based lender the International Monetary Fund – IMF. Zambia recently approved a supplementary budget to the end of the year. The central bank at the start of the third quarter increased its auction size offerings by 37% as the Ministry of Finance seeks to rely on domestic market borrowing while halting external finance to keep its debt in check. Zambia hired French Investment bank Lazard Freres to restructure its $11.23billion external debt as it seeks to restore fiscal fitness. Asides this the copper producer has taken to issue COVID bonds whose proceeds are targeted at restructuring domestic arrears owed to retirees, suppliers and contractors.
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