BANKERS Association of Zambia (BAZ) says commercial banks will still be deducting loan repayments because existing terms and conditions under which the loans were contracted are still in force.

In a statement, Thursday, BAZ president Leonard Mwanza said all loans contracted by public service workers through bilateral agreements with commercial banks and other financial institutions would remain active and serviced through direct debit orders.

Mwanza added that the association was awaiting further guidance from government on the ongoing reconciliations and debt buy-back mechanisms.

“The Bankers Association of Zambia (BAZ) has taken note of the intention of government and representatives of the public service workers’ unions, to provide relief to public service workers under the debt swap initiative. We wish to advise the public service workers with existing loans obtained from commercial banks and other financial institutions, that the existing terms and conditions under which these loans were contracted are still in force,” said Mwanza.

“In this regard, all loans contracted under the Payroll Management and Establishment Control (PMEC) shall remain active and serviced by the government. Equally, all loans contracted by public service workers through bilateral agreements with commercial banks and other financial institutions shall remain active and serviced through direct debit orders in individual bank accounts as contained in the existing loan agreements. The Association awaits further guidance from the Government on the ongoing reconciliations and the debt buy-back mechanisms.”

On Wednesday Accountant General Kennedy Musonda announced the Treasury had released of K200 million as third-party payments to micro-finance institutions for the months of March and April 2021 in respect of civil servants’ salary-backed #loans, and a further K55.3 million targeted at clearing third-party obligations to commercial banks up to June 2021.

Ministry of Information and Broadcasting Services Permanent Secretary Amos Malupenga recently announced that government would start implementing the debt swap strategy by the end of July.