Standard Chartered Bank Anticipates Boost In Economic Growth From Debt Restructuring
Standard Chartered Bank has congratulated the Government of Zambia on the recent announcement of the successful debt restructuring deal. According to the agreement, the country’s external debt maturity will be extended to 20 years, with a 3-year holiday, easing the burden of debt servicing and providing breathing space for necessary economic reforms.
Commenting on the historic deal, Standard Chartered Bank, CEO, Sonny Zulu, stated that the debt restructuring deal is a positive step forward for our country’s economy.
“Zambia will be set on a sustainable growth trajectory and macroeconomic stability. Not only do we expect to see increased Foreign Investment (FDI) coming into the country, but we also expect that the country’s credit rating will improve. This will also see the country gain access to foreign debt markets,” Mr Zulu said.
Mr Zulu stated that with the debt restructuring in place, the country is earmarked to see a positive knock-on effect on the banking industry with improved foreign exchange liquidity. This will give banks greater appetite for lending which will, in turn, lead to increased assets growth and improved access to finance for businesses and individuals.
“Banks are likely to demonstrate greater appetite for lending and asset growth as result of the deal. We will also expect to see more foreign investor flows, which are likely going to improve foreign exchange liquidity. This will become clearer when the Budget will be presented in September,” he explained.
The Standard Chartered CEO added that as companies demonstrate consistent strength in terms of growth and profitability, it is likely that banks will increase lending. This will be hinged on reduced borrowing by the government and increased lending into the private sector
Mr Zulu stated that one of the most significant benefits of the deal on the private sector and individuals is the anticipated low interest rates. “Interest rates are likely to come down once we see Foreign Exchange (FX) stability. As FX has a bearing on inflation, stable FX will be supportive of stable inflation/interest rates. This stable currency is also a catalyst for lower rates from a Non-Resident participation point of view. We hope to see less ‘crowding out’ of the private sector by the government, who sometimes step into the market to raise funds,” Mr Zulu noted.
He further highlighted that the lower interest rates will make it easier for business and individuals to access financing, thereby stimulating and igniting new growth opportunities.
Standard Chartered Bank looks forward to supporting economic growth by working alongside the Government, various sectors of the economy and individuals in taking advantage of the new opportunities made available by the recent debt restructuring agreement.
Source: Standard Chartered Zambia
