Africa’s red metal hotspot continues to be a darling to global and multilateral partners especially after the August 2021 election outcome. The copper producer has made significant strides towards restoration of fiscal fitness in such a short space under the leadership of Hakainde Hichilema. The Southern African nation, has in the week beginning January 22 hosted two of the world’s most powerful female personalities in the womenomics faculty – the US Treasury Secretary Janet Yellen and the International Monetary Fund’s Managing Director Kristalina Georgieva. Janet Yellen is said to be woman that has done what no man has done in the US scoring a hattrick by being Chair of the Council of Economic Advisors, Chair of the US Federal Reserve and currently US Treasury Secretary while Kristalina Georgieva has served as Chief Executive Officer of the World Bank and now serves as IMF Managing Director.
A very rare moment for the nation of Zambia especially at a time when its authorities are negotiating a debt restructure with bilateral and private creditors. The visit has nonetheless kept the markets seeking for clues as to when the restructure will successfully close for the copper producer to restore fiscal fitness fully.
Zambia is in the labyrinth of a reorganization of its sovereign obligations for which it became the first nation to default on its dollar bonds during the COVID19 pandemic. Twenty one months after officially requesting for financial assistance from the Washington based lender the IMF, the Southern African nation was on August 31, 2022 granted a $1.3 billion extended credit facility as precursor to successful debt restructure. However, delays in agreeing with bilateral and private creditors under a G20 common framework, has left the markets weary and the visit by the IMF Chief and US Treasury Secretary has raised hopes for all taking bets on Zambia’s economic recovery.
It remains a dry point of construction that Zambia’s political capital is earning the copper producer economic dividends that continues to make it a darling among global players and partners. Despite being default rated on its foreign currency long term issuer rating by the international rating agencies, the red metal producer continues to attract global investments against the odds and has been sighted as one of the best democracies in the world.
“We were honored to host the US Treasury Secretary Ms. Janet Yellen and her delegation at state house this afternoon. We thank her for accepting our invitation to Zambia following our earlier meetings and other engagements when we visited the US last year,” Hichilema said on his social media page. We also underscored the need for speedy resolution of our country’s debt restructuring process so we can quickly stabilize the economy and focus on creating more opportunities for Zambian citizens that will lead to job creation, he said.
Earlier, Hichilema hosted Kristalina Georgieva were he thanked the IMF for supporting Zambia’s homegrown economic transformation agenda and urged them and other institutions to do more in ensuring that these programs had an immediate impact on the people. Other critical areas deliberated on concerned debt restructure.
“We deliberated on the need for tangible and speedy progress in resolving our debt restructuring process in order to quickly get the country on a more sound economic standing,” Hichilema carried on his social media page.
Georgieva hailed the Zambian government’s good use of public resources in pivoting towards areas of social growth such as education. The IMF Chief affirmed the funds commitment to the Zambian people whom she hailed as the country’s best resources.
Zambia’s good governance has earned it confidence with multilateral partners such as the World Bank that have supported it through the International Development Association with the last approval being a $100 million concessionary credit of the $740 million extended in 2022 targeted at easing debt distress.
Debt restructure remains a key milestone to attain and its subsequent delays continue to keep the Kwacha yield curve elevated thereby slowing the pace of interest rates compression. Most players that are hedging their bets on Zambia remain split between remaining hopeful towards a successful debt obligation reorganization in a global chaotic world and seeking risk – on opportunity in regions with greater clarity around economic direction. Zambia remains one of the worlds most resilient economies post the COVID pandemic.
The Kwacha Arbitrageur