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The Unintended Consequence of Lusaka’s Decision to Allow Partial Withdrawal of Pensions 

Zambia’s pension authority has paid $300million to people who have taken up the option of cashing out 20% of their pension savings, following a law passed on April 17. But the withdrawal spree could hurt the Zambian government’s ability to raise money from its domestic market, Bloomberg reports, as a third of pension fund investments are in the country’s bonds and treasury bills. Zambia is already shut out of international money markets given its debt default in 2020 and the IMF is holding off on a $188 million loan. The pension authority expects to pay out a further $269 million under the partial withdrawal scheme. Zambia continues to largely depend on the domestic market to fund its elevated general government deficit, that’s set to reach 7.7% of gross domestic product this year, S&P said. Bonds and Treasury bills account for more than one-third of pension fund investments in Zambia, according to government data.