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International Monetary Fund  (IMF) Resident Representative for Zambia, Eric Lautier, says the successful conversion of the three defaulted Euro bonds into two new bonds was a major milestone in resolving debt sustainability. 

Mr Lautier said the new bonds now have much lower interest rates and extended maturities enabling the Zambian government to start servicing again its restructured debt. 

He said as a result, rating agencies have started upgrading Zambian debt rating from selective default. 

Mr Lautier said this is a breath of fresh air for the economy, as it should lower the cost of capital for the private sector going forward. 

He said to address more pressing issues, the Economics Association of Zambia – EAZ will host the 2024 Economic Summit on July 25th and 26th at Ciela Resort in Chongwe District, Lusaka, where stakeholders will analyze strategies to navigate the disaster and foster economic resilience. The theme of this year’s summit is “Pioneering Zambia’s Sustainable Economic Transformation through Climate Change Adaptation and Sustainable Financing Mechanisms after Debt Restructuring.”

Meanwhile, the IMF Representative for Zambia,  however, pointed out that commitments to sustain debt sustainability also go a long way to avoid non-concessional debt and limit new external borrowing to prevent increasing the debt burden beyond available resources.

He said for Zambia to be able to invest in priority sectors such as education and health while continuing to service its restructured debt it must continue to follow a multi-year fiscal consolidation path going forward.

Mr Lautier said this involves mobilizing more revenues and enhancing the efficiency of public spending. 

“But what does mobilizing more revenues in practice, it includes both finding new sources of revenues and improving tax collection by leveraging digital solutions and making it easier for the taxpayer to fill taxes » he asserted. 

He said the IMF recognizes that the Zambia Revenue Authority is making remarkable progress in modernizing and improving tax administration and compliance with among others the full launch of an electronic invoicing system in July 2024, and the introduction of the digital Tax Clearance Certificate. 

He said these initiatives aim to enhance revenue collection, reduce fraud, and increase taxpayer compliance. 

“But as always more will need to be done to ensure Zambia has sufficient revenues to finance its development agenda and become more resilient to shocks. This must be achieved equitably with a more diversified source of revenues and a more progressive form of taxation. For instance, improved tax collection on property tax with updated valuations and rental income taxes are examples of desirable progressive taxes meaning they would usually affect relatively wealthier citizens allowing for a fairer distribution of the tax burden in the economy and providing much-needed support for the ongoing decentralization process. On the expenditure side, this year the government had to reprioritize spending to preserve essential social and investment expenditures,” he said. 

The IMF Representative for Zambia said going forward progress in the implementation of public financial management reforms will need to continue to help improve the transparency and efficiency of public spending. 

“This includes ensuring that there is both an effective rollout and effective use of the IFMIS system to record spending and transactions In all 61 central government budgetary institutions but also progressively roll out other information systems to better monitor and track spending in districts and constituencies. Then reforms in cash management and better public investment management will all help in ensuring every kwacha goes further. I am only naming a few of the interesting topics we will cover during the summit, so please join us on July 25 and 26 to continue the discussions,” he said.

This is contained in a statement issued by the Economics Association of Zambia – EAZ Acting Chief Executive Officer Tendai Posiana.