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Alba Iulia
Monday, November 29, 2021

Debt Service Suspension Initiative is not forgiveness of debt or anything similar, HH ‘s Government told

Economy Debt Service Suspension Initiative is not forgiveness of debt or anything similar,...

The Centre for Trade Policy and Development (CTPD) has implored the new dawn government not to take the Debt Service Suspension Initiative (DSSI) signed with a number of lenders as a typical debt service holiday.

CTPD Researcher Public Finance Wakumelo Mataa explains that the DSSI is not forgiveness of debt or anything similar, but merely a holiday in the repayment of the debt owed.

Mr Mataa says it’s therefore, wise to utilize such a holiday by boosting income sources while negotiating for a prolonged repayment period for other debts that may be owed.

He says this would lighten the debt burden, and enable the borrower to honour the debt obligations at the expiry of the Debt Service Suspension Initiative.

Mr Maata notes that previously, Zambia has not made use of this principle.

He says despite the initial halt in servicing interest payments on external debt, nothing much was done to boost productivity, while the debt restructuring process stalled at the backdrop of protracted discussions with the International Monetary Fund (IMF).

Mr Maata further asked government to give an update on the Zambia’s application in February 2021 for treatment under the Common Framework which also covers Chinese creditors.

6 COMMENTS

  1. I think seriously to be telling HH and Situmbeko that this is not debt forgiveness is a Joke; you honestly think they will take it as something else ? with the amount of experience both have ???? I have heard a lot of such reminders to focus on income generation. People this is a country and there has to be a balance with social needs; if the New dawn government is frugal enough you will see significant savings. I think in the first Year they want to see how much their measures can save becoz there has been a lot of wastage and economic advisors have fallen into the trap of basing their advice on previous regime of doing things; we saw this under the new deal government.

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  2. Well articulated. By the way, we still need to embrace China because it owns 67% the DSSI covered bilateral official credit. This initiative came into effect only in May 2020 as a result of the covid pandemic that affected low and middle lower income countries. However these countries still have to meet their public external debt service obligations to private and multilateral creditors. These are not covered in the DSSI but may only participate on their free will.

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