Yields in Kwacha Fixed income government securities widened to as high as 500 – 525 basis points (bps) in the 26 April debt sale. Five year bonds were allocated at 30.5% from 25.5%, while 2 year and 3 year yields rose in similar fashion by 550 bps and 525 bps to 29.55% and 29.75%. Yields in the money markets have been on a bearish streak following markets pricing in deteriorating sovereign risk given the current fiscal posture of the copper producer. In Thursdays 25 April treasury bill sale 9 – month and 1 – year yields rose 75 and 94…
Author: The Editor
The currency in Africa’s copper producer Zambia, the Kwacha is bearing the brunt of souring sentiment given the ailing fiscals. Zambia’s reserves are positioned at a decade low representing 1.6 months of import cover at $1.45 billion as at Jan 2019 as reported by its central bank. Moody’s was also on record hinting a lowering of Zambia’s risk assessment on the back of deteriorating credit risks. Read also: Moody’s could lower Zambia’s rating if credit risks elevate further Against the US dollar, the Kwacha shaved value to close 25 April at K12.65 from week start levels of K12.3. This trajectory…
China aims to make the Belt and Road initiative sustainable and prevent debt risks, its finance minister said on Thursday, seeking to allay criticism that the infrastructure plan to boost trade and investment creates a heavy burden for some nations. The policy championed by Chinese President Xi Jinping has become mired in controversy, with some partner nations bemoaning the high cost of projects, though China has repeatedly said it is not seeking to trap anyone with debt. Western governments have tended to view it as a means to spread Chinese influence abroad, saddling poor countries with unsustainable debt. Finance minister…
The Bank of Zambia – BOZ on 25 April sold short-dated government securities worth K317 million (in cash terms) in a deeply under-subscribed debt sale. On offer was K950 million while all bids were absorbed totaling K384 million (in nominal terms). Today’s auction is the ninth under subscription of 10 debt sales and was a dejavus of last fortnights experience at 33% uptake signaling funding deficits for the government. Auction subscription skew was in the 1 – year and 9 – month at 53% (K168 million) and 44% (K139 million) whose pricing is fairly attractive at 24.25% and 24.9999% respectively.…
Other rating agencies – S&P and Fitch are on the lookout for Zambia in light of balance sheet vulnerabilities Moody’s rating agency has advised in a note that Zambia’s sovereign rating could be revised lower if the credit risk environment deteriorates. The copper producer was last rated Caa1 (stable outlook) last July. Zambia currently grapples with rising external (of $10.05 billion) and domestic debt in arrears (of K15.5 billion) which are impacting liquidity and ultimately adversely affecting the credit environment. Moody’s Analyst Daniella Re Fraschini forecasts that the copper producers debt to gross domestic product will approach 75% by year…
Growth pulse is at risk for net importing SSA’s whose inflationary pressure could shape tighter monetary policy direction Growth has become a very topical issue globally especially in light of the autopsy of the trade impasse between United States and China. Brexit is another pain point breeding uncertainty that is manifesting in market nervousness across the European Union – EU area. Geopolitical tension between US and Asian nations is affecting supply of crude oil which is affecting global risk sentiment and appetite for assets. The World Bank recently lowered growth forecasts for Sub Saharan Africa – SSA nations to 2.5%…
ZESCO to raise K16 billion in first year of implenetation Chief executive officer at Zambia’s energy generation company ZESCO Ltd, on 24 April justified the 91% average retail tariff hike proposal. ZESCO has formally written to the Energy Regulation Board – ERB suggesting an upward adjustment to retail tariffs aimed at funding capital expenditure needed to make electrification possible. Mr. Victor Mundende said during a presentation in Lusaka that ZESCO had proposed to increase retail tariffs to K1.87/kWh from 93 ngwee/kWh for the residential segment. ZESCO also proposed to exterminate the monthly fixed charge and will roll these into the…
Fitch Solutions expect broad depreciatory trends for most African currencies over the coming months.Rising inflation weighing on real interest rates will be a common trend across the region, while in countries including South Africa weak economic growth will limit policymakers’ capacity for monetary tightening to defend currencies.Fitch expects the managed currency regimes of Nigeria and Angola to be maintained. However, risks of steeper declines in foreign reserves in controlling their exchange rates remain due to their exposure to potential volatility in global oil prices, which could put pressure on the sustainability of these policies. We forecast most African currencies to…
The Economics Association of Zambia (EAZ) has echoed the need for Zambia to restrategise as public Finance is not rocket science. Association President Dr. Lubinda Haabazoka said delayed salaries, rising public debt are all early warning signs of greater economic turbulence to come hence the need to think outside the box in addressing these challenges. In the wake of economic woes characterized by liquidity issues, funding strains, rising currency risks and public debt, think tank in Africa’s second largest copper producer Zambia has called the Zambian authorities to go back to the drawing board to restratgise to curb these risks.…
Economic think tank in Africa’s second largest copper producer Zambia, urged the state to defer the proposed sales tax. Association President Dr. Haabazoka on the EAZ website proposed that government zero rate domestic Value Added Tax (VAT) for legal entities in the meantime but keep import Value Added Tax nonetheless. Dr. Haabazoka further suggested the suspension of Import VAT refunds in a move that he believes will curb revenue leakages yet maintain collections from VAT to allow the state to move its budget targets. “We should do everything possible to ensure that the currency depreciation does breach the K13 mark.…