Economist Backs Zambia’s Eurobond Buyback Plan
By Ellen Hambuba
Economist and University of Zambia lecturer Professor LUBINDA HAABAZOKA has backed the Government’s decision to buy back part of its Eurobond debt, describing the move as a significant step towards lowering future debt costs and strengthening public finances.
Professor HAABAZOKA says the operation targets more than US$1.3 billion worth of bonds issued under Zambia’s debt restructuring programme.
He notes that the bonds carry commercial and step-up interest rates, which become more expensive over time, unlike concessional loans offered by institutions such as the African Development Bank -AfDB.
Professor HAABAZOKA says repurchasing and permanently cancelling the bonds will reduce future debt obligations and eliminate long-term interest payments.
He says the buyback, which will be largely financed through a US$600 million AfDB facility, is expected to significantly lower financing costs, improve debt sustainability and ease pressure on public finances.
According to Professor HAABAZOKA, lower debt servicing costs could create additional room in the national budget for investment in health, education, agriculture, infrastructure and other development priorities.
He said the AfDB’s support demonstrates confidence in Zambia’s economic recovery efforts and the fiscal reforms being implemented by the Government.
Professor HAABAZOKA said the transaction marks an important shift from debt crisis management to a more proactive approach focused on debt reduction and prudent public financial management.
Zambia issued three Eurobonds worth about US$3 billion between 2012 and 2015 to finance infrastructure and development projects.
However, rising debt obligations and economic difficulties led the country to default on its external debt in November 2020, making it the first African nation to default during the pandemic.
Since completing its debt restructuring process in 2024, Zambia has continued pursuing measures aimed at restoring debt sustainability, including the latest Eurobond buyback initiative.
Professor HAABAZOKA said the latest move could help place the country on a stronger financial footing while supporting long-term economic growth.