Economist Kelvin Chisanga says Zambia’s decision to lift the cap on foreign participation in local-currency bonds is a calculated move aimed at easing short-term liquidity pressures.
Mr. Chisanga has cautioned that the policy should not be viewed as a structural solution to the country’s debt challenges, but rather as a tactical response to an imminent US$1 billion repayment obligation.
He notes that the timing of the decision is both deliberate and sensitive, coming at a period when Zambia still has limited access to international capital markets following its debt restructuring.
In a statement, Mr. Chisanga explained that the move could help broaden the investor base and reduce the government’s reliance on local banks for financing.
However, he warned that increased foreign participation also exposes the economy to risks associated with capital-flow volatility and shifts in global market sentiment. He stressed that any weakening of fiscal discipline or monetary credibility could result in a sharp reversal in investor confidence.
