Economist Bright Chizonde has
raised concerns about the impact of the recent debt restructuring progress
on the performance of the Zambian Kwacha.
Despite the Minister of Finance
and National Planning Situmbeko Musokotwane’s announcement that about 90 percent of
bondholders have consented to the restructuring of the country’s US$3.5 Billion
Debt, Chizonde emphasized that the Kwacha continues on a trajectory of
depreciation, with the restructuring efforts falling short of enhancing its
value.
Speaking in an exclusive
interview with the Zambian Business Times, Chizonde highlighted that the market
players and foreign investors have become less reactive to the progression of
the debt restructuring, resulting in a diminishing impact on the Kwacha over
time.
He pointed out that while the
initial announcement had a more significant impact on the Kwacha, subsequent
reactions from market players have been less pronounced.
Chizonde cautioned that the
short-term impact of the restructuring may not be sustained, as market players
have adjusted their expectations in light of the Kwacha’s ongoing depreciation
trend.
Chizonde further stressed the
need for the Central Bank to implement long-lasting measures to bolster the
Kwacha’s performance and specifically called for stringent tracking of earnings
from copper exports, emphasizing the importance of ensuring that the proceeds
from copper are effectively channeled into the banking sector to facilitate
Kwacha appreciation. He underscored the significance of realizing the full
earnings from copper, citing previous difficulties in accurately tracking these
earnings.
“What we have observed is
that the impact on the Kwacha seems to be reducing overtime compared to the
time when the initial announcement about the restructuring came to light and
when we did our first review of the program, the impact on the kwacha was more
significant but overtime people seem to react less, it will have some short
term impact and it will not last for a long period of time, the market players
are well aware of that the Kwacha is on a trend of depreciation and they have
resolved to lower their expectations,” he said.
He said there is need for the
Central bank to focus installing long lasting measures like increasing the
earnings from copper by stringently tracking the earnings unlike in the past
when there has not been a viable system of tracking the exports.
“The Central Bank must ensure that the
proceeds of copper are realized, because in the recent past we have had
difficulties in tracking all the earnings from copper, they must make sure that
that money hits the banking sector so that we can have that appreciation
