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Tuesday / November 5.
HomeMarketsProgress in debt restructuring fails to boost Kwacha value – Expert

Progress in debt restructuring fails to boost Kwacha value – Expert

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