Zambia’s central bank will hold its first rate decision meeting, post default will seek to manage a potential currency rout exacerbated by general asset sell-off pressure as investors fret over deepening fiscal fragilities. Deliberations on the monetary policy stance that will prevail over the remainder of the year 2020, commenced on Monday 16 November and will run for two days traditionally with the apex being Wednesdays November 18 announcement. This will be Christopher Mvunga’s debut session at which the markets remain expectant on what measures will be announced to curb exchange rate depreciation post disease pandemic and the most recent default on…
Author: The Editor
Minister of Finance in Africa’s red metal producer on 14 November justified defaulting on its coupon interest on its 2024 dollar bond whose 30 day grace period elapsed on Friday November 13. “It was difficult for us to pay dollar bond holders seeing that we were already in arrears with other creditors,“ Dr. Bwalya Ng’andu said in a Sunday interview. “I have defaulted already with other commercial lenders and paying bond holders would complicate negotiations with other lenders,” he said. The G20 on November 13 extended reprieve on interest payments for nations to June 2021 given the increased burden on…
October business pulse in Africa’s copper hotspot, Zambia, rallied to a 20 month high with a headline reading of 48.9 from 46.6 levels in September. Readings above 50 signal expansion while those below 50 reflect contraction. According to Market economics release, Zambia’s private sector neared stabilization during October as business conditions across the country showed signs of improvement following the worst of the coronavirus disease pandemic earlier in the year. The red metal producer has been in the doldrums (<50) for 21 straight months given persistent themes namely power bottlenecks, high fuel prices and currency depreciation which elevated manufacturing costs.…
Disease pandemic risks have been a dominant theme in global financial markets in 2020. In Africa’s second largest copper hotspot, Zambia, disease pandemic has manifested in a faster climb in costs than revenue growth for the financial sector, a negative jaws scenario. According to third quarter prudential returns published in the local press, aggregate jaws for the period averaged -8.2% on a year on year basis. This was exacerbated by a 30.6% industry spend jump to K6.25billion surpassing a 21.5% rally in total income to K9.30billion. Key cost drivers in the period were Zanaco Plc (K1.24billion), Stanbic Bank (K0.92billion) and…
Zanaco Plc head office on Cairo road in Lusaka the capital.
Stanbic Bank Zambia head office in Addis Ababa drive in Lusaka the capital. Picture credits:-the business telegraph.
Moodys Investor Services this week on 27 October maintained a ‘Ca’ rating despite analysts expectations of a selective default as other rating agencies. A week ago, Standards and Poor’s (S&P) lowered the copper producers fiscal rating to Selective Default (SD) given look default risks and fiscal fragilities. “Zambia’s credit profile is constrained by its liquidity and external pressures, which the pandemic has intensified and that limit its capacity to service debt. The rating captures Zambia’s approaching default and our expectation that a subsequent likely debt restructuring will result in large losses to private sector creditors. The rating also reflects institutional…
In the labyrinth of uncertainty lies silver linings for Africa’s second largest copper producer Zambia as every second that ticks gets it closer to the bondholders vote. Earlier in September, the Zambian government sent out a solicitation request to dollar bond holders seeking a 6-months suspension on coupon payment to run to 14 April 2021 for sums totalling $160million. It is evident that COVID has amplified, already existing fiscal fragilities that has triggered talks between African fiscal heads with almost all creditor classes for reprieve as they journey to claw back eroded growth and balance fiscal obligations to avert default…
Inflation in Africa’s second largest copper hotspot quickened by 30 percentage points to 16% fuelled by rising food prices, key drivers being meat products. The food component of the Consumer Price Index -CSI accounted for 49.4% (7.9%) while non food absorbed the remaining (50.6%) 8.1% of the 16.0% reported by the Zambia Statistics Agency – ZSA. Month on Month (MoM) inflation for the October period slowed to 1.3% from 1.4% while food inflation accelerated to 1.6% from 0.6% as maize and meat prices widened. Non food inflation ebbed lower to 0.9% from 2.3% driven by rising vehicle prices as currency…
Washington based lender the International Monetary Fund – IMF has named Preya Sharma as Zambia’s resident representative taking over from Alfredo Baldini who was deployed back to the fund two years ago. This appointment comes at a time when the copper producer is in the labyrinth of debt restructure talks with Chinese and dollar bond (holders) creditors seeking reprieve given amplified disease pandemic effects. Zambia, has had no resident representative for two years which made any IMF engagements bleak until the last week of June after the Denashwar Ghura led Article IV Mission team visit when the Southern African nation…