‘Local firms can assist restructure domestic debt’

LOCAL firms should assist Government restructure the K26.3 billion domestic debt if they feel side-lined with the engagement of Lazard which has been contracted to restructure external debt.

Zambia has hired Lazard Freres Gestion of France for US$5 million to restructure the US$11 billion foreign debt over a three-year period, a 0.05 percent of the entire foreign debt portfolio.

Mr Mutisunge Zulu, a financial analyst, said If local technocrats feel side-lined, they could assist the Ministry of Finance restructure domestic arrears of K26.3 billion for even five basis points.

Mr Zulu said the debt restructure cake was massive because domestic debt also remained a concern.

He explained that external debt restructuring was a complex and technical process involving travel to communicate and engage creditors, legal fees and other expenses.

“I imagine Lazard will have to trace key creditors holding dollar bonds or engage the biggest creditors, the Chinese to suggest deferrals or some sort of lengthened duration.

“Suffice to say there are few to no firms in Zambia that would restructure the nation’s external debt let lone any with a track record as Lazard. Lazard scored 95 percent on technical competence and also had a very solid financial standing,” Mr Zulu said in an interview.

Mr Zulu said Zambia’s bold step to take debt advisory seriously sent the right signals towards restoration of fiscal fitness.

He stressed that the Zambian authorities had made a very positive step towards solving an economic crisis.

“Politics will come to play with criticism which is constructive, the Minister of Finance is onto the right path as unpopular as it may seem,” Mr Zulu said.

On the negative reaction from the international market after Zambia engaged Lazard, Mr Zulu said the feedback was expected.

“The markets reacted to the Lazard news with a sell-off initially when credit spreads on Eurobonds widened a few basis points as markets priced in admittance that Zambia’s debt unsustainability was a real issue.

“The authority’s engagement of an advisor