The Zambian Government has accrued cumulative debt service arrears of about US$1.5 billion following the debt service standstill put in place for all its non-multilateral creditors not participating in the Debt service suspension initiative (DSSI).
The ministry of finance however spent a reduced total of US$88.09 million as debt service payments comprising of principal pay down of US$ 65.17 million and interest payments of US$22.92 million respectively in the first half (H1) of 2021.
According to information made available to the Zambian Business Times – ZBT, the significant reduction in external debt service payments in comparison to US$410.62 million recorded in 2020 for the same period was due to the debt service standstill that the Government put in place for all its non-multilateral creditors not participating in the Debt service suspension initiative (DSSI).
This was aimed at allowing Government time to review its debt portfolio in view of the scheduled restructuring discussions with the creditors.
And Former Secretary to Treasury Fredson Yamba said arising from the debt service standstill, Zambia’s cumulative external public debt arrears amounted to US $1,475.89 million as at end June 2021, of which US $ 1,005.5 million were principal arrears (included in the debt stock), US$470, 347.2 million were interest arrears and US$6. 84 million were other debt charges.
“A total of US $624.51 million was accrued as arrears between January and June 2020, of which US $379.3 million were principal arrears and US $240.4 million were interest arrears.
“Debt service further reduced as a result of the debt service suspension granted to Zambia by members of the G20/Paris Club and other private creditors from January to June 2021, under the DSSI extension,” he said.
Yamba said Government’s external debt stock as at end June 2021 increased by 1.3% to US $12,909.85 million from US $12,738.30 million as at end December 2020. He said the increase was on account of continued disbursements on existing project loans largely from multilateral institutions and supplier creditors to finance on-going priority infrastructure projects.
Yamba explained that the proportion of Commercial debt to total public external debt was 46% in the first half of 2021 accounting for the largest proportion, with the Eurobonds accounting for 51% of commercial debt.
He said bilateral debt accounted for 30%, while multilateral debt (including plurilateral) accounted for 24%.
“In the first half of 2021, Government contracted one new concessional loan amounting to US$105 million as additional financing for the Girls Education and Women’s Empowerment and Livelihood Project (GEWEL).
“The funds were earmarked for support to girl’s education and women empowerment,” Yamba disclosed.
He said the stock of domestic debt contracted through issuance of Government Securities, grew by 38.42% to K180.24 billion as at end-June 2021 from K130.21 billion as at end December 2020. Yamba said the increase was necessitated by the need to finance the budget.
He said in terms of borrowing by instruments, Government bonds accounted for 80.42% while Treasury Bills accounted for 19.58%.
“The stock of Government Bonds stood at K144.94 billion compared to K97.21 billion at end December 2020, while the stock of Treasury Bills also increased to K35.30 billion from K33.01 billion as at end December 2020. This represents a percentage increase of 59.02 % and 6.93%, respectively,” Yamba added.
