This week the IMF mission team commences its technical assessment of Zambia. This will be the first visit to the copper producer after the August polls. Under new leadership it is vivid that policy changes are inevitable in various sectors ranging from mining to energy. The IMF announced last week that a team would court Zambia to catch up on latest macroeconomic developments.
READ ALSO: Zambia’s engagement strides with the IMF fuels optimism
The last update was that the IMF had agreed a macroeconomic framework with Zambia but the political will to implement the agreed actins would determine when a deal would be concluded. This was the week leading up to parliament dissolution. Zambia faces new leadership at head of state and MinFin level after Hakainde Hichilema ascended to Presidency and the appointment of Dr. Situmbeko Musokotwane as fiscal head.
Speculation continues to grip the market as to when exactly the deal will close seeing that it is now 19 months from the time Zambia formally requested for financial assistance with the Washington based lender. At the time Dr. Bwalya Ng’andu a former central banker was MinFin head.
Zambia’s delegation led by President Hakainde Hichilema meets the IMF delegation led by Kristalina Georgieva the Managing Director.
In the US visit, Zambias head of state Hichilema met with Kristalina Georgieva to commit Zambia to restoring fiscal firmness from a political will perspective. It’s the first time in the history of the copper producer that a head of state was courting multilateral heads of both the IMF and World Bank to discuss matters of economic reconstruction etc. The Zambian delegation also met David Malpas Head of the World Bank.
THREE WEEKS BEFORE NATIONAL BUDGET AND AHEAD OF LENDERS BOARD MEETING
The IMF visit comes 3 – 4 weeks before presentation of the 2022 budget which many key stakeholders are interested in clues around policy direction aligned to the country’s growth target. This visit also comes ahead of the annual board meetings that discuss packages which has kept many wondering if Zambia’s case (IMF application) will make it in this governance cycle. The delayed package has continued to spark debate as to whether or not Zambia needs bailout given record red metal prices on the London Metal Exchange – LME while other schools of thought focus on weighing in the evils of financing programs.
READ ALSO: Dollar Bond Markets Eagerly Seek Clues on When IMF Deal will Wrap for Zambia
With a $750million 2022 bond maturity in September next year, the Southern African nation remains in the labyrinth of a debt restructure whose success is highly dependent on an IMF deal. Creditors have vividly stated that success debt restructure will require bailout with the Washington based lender. The red metal producer has missed a series of coupon payments that earned it default status with international rating agencies. These items of issue have made bailout critical for Zambia if it is to attain sustainable recovery, widen foreign direct investment flows and earn a credit rating upgrade with the international rating agencies to redeem its current default rating.
The Kwacha Arbitrageur
