The Civil Society for Poverty Reduction (CSPR) has urged the Zambian Government to exercise maximum caution, transparency, and accountability regarding the planned repurchase of the country’s restructured Eurobonds. CSPR Executive Director Isabel Mutembo Mukelabai confirmed that the organization thoroughly reviewed the Ministry of Finance and National Planning’s announcement, which details the intention to repurchase approximately US$1.36 billion in Fixed Rate Step-Up Amortizing Notes, originally due in 2053.

In a statement released from Lusaka, Mukelabai characterized this transaction as a crucial Liability Management Operation. She further elaborated that it represents a debt-for-development or debt-for-energy conversion, essentially involving the replacement of existing commercial debt with a new multilateral loan. The primary source of financing for this initiative is a $600 million concessional loan from the African Development Bank (AfDB), which is explicitly linked to a national infrastructure investment programme.

CSPR emphasized the significant implications of such debt management decisions, stating that they profoundly affect Zambia’s fiscal stability, exchange rate position, public accountability frameworks, and the nation’s long-term debt sustainability. Mukelabai highlighted a critical feature of the Eurobond in question: its step-up nature. This means that the coupon rates would progressively increase over the life of the notes, thereby imposing an escalating debt service burden on the national Treasury until its maturity in 2053.

By retiring this instrument now, Zambia aims to circumvent these rising future payments, which would otherwise become increasingly onerous. However, Mukelabai also stressed the imperative need to carefully assess the implications of the new $600 million AfDB loan, as it introduces a new long-term external liability that warrants careful consideration. Despite this, CSPR acknowledged the positive aspect of the transaction, recognizing it as a valuable opportunity for Zambia to alleviate the burden of an expensive external commercial debt instrument and mitigate future repayment pressures, thereby improving the country's overall debt profile.