CTPD tasks Zambian govt to conduct NPV analysis in Eurobond buyback deal, demands transparency

The Centre for Trade Policy and Development (CTPD) has urged the government of Zambia to exercise caution and undertake a comprehensive Net Present Value (NPV) analysis of its recent Eurobond buyback programme, warning that the headline success of the transaction may not fully reflect its true fiscal cost. The Ministry of Finance and National Planning recently concluded a tender offer to repurchase part of Zambia’s US$1.36 billion Eurobond due in 2053. The operation is backed by a US$600 million facility from the African Development Bank and an additional US$65 million incentive aimed at boosting bondholder participation.

Preliminary results show a strong 97.85 percent participation rate, a development CTPD described as a sign of confidence in the structure of the deal and the government’s broader debt management strategy. However, CTPD Public Finance Researcher, Robinson Nakambo, warned that the high participation rate alone should not be interpreted as evidence of fiscal gain. He stressed that without a full NPV assessment, it remained unclear whether the buyback delivered real long-term savings for the country.

“The key concern is whether the combined cost of the repurchased Eurobond and the new AfDB-backed financing is lower, in present value terms, than the future debt service obligations being replaced,” he said. Nakambo noted that only a detailed NPV comparison can determine whether Zambia was genuinely reducing its debt burden or simply restructuring it under new terms. He further highlighted the need for full disclosure of the AfDB loan terms, including interest rates, repayment schedules, grace periods, and maturity structure.

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It said these variables were essential for accurately assessing the transaction’s impact on Zambia’s debt sustainability framework. Nkambo cautioned that while the use of concessional financing and debt restructuring tools is a positive step, the absence of transparent cost-benefit analysis could obscure the true fiscal implications of the deal. He also warned that the expected economic benefits from improved electricity infrastructure—one of the stated goals of the transaction—must be clearly quantified and measured against the financing costs.

The organisation concluded that Zambia’s Eurobond buyback could strengthen debt sustainability only if the NPV outcome confirms net savings and if projected gains from improved energy infrastructure are fully realised. Without this, CTPD warned, the country risked replacing one financial pressure with another under more complex financing arrangements.

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