Africa’s red metal producer Zambia is a macroeconomic framework away from an International Monetary Fund (IMF) bailout package. Speaking at a COVID economic brief at which Finance Minister Dr. Bwalya Ng’andu announced fiscal stimulus measures to curb economic contraction in the disease pandemic era, it was established that Zambia was in talks with the Washington based lender for other appropriate facilities for which the copper producer qualifies. Earlier the IMF accorded ssupport to 25 African countries under the Catastrophic Containment and Relief Facility – CCRT of which Zambia’s eligibility was in the balance because its per capita income is above International Development Association’s -IDA cut off of $1,175 at $1,539. Let alone Zambia is a middle income poor country.
“We are engaging the IMF with the view to benefit from other appropriate facilities to which Zambia qualifies. With respect to an economic programme, Zambia has just completed a two-week virtual mission with the IMF at which an assessment of the macroeconomic and fiscal situation was undertaken. This follows Zambia’s request for an economic programme with the IMF which was made at the end of 2019,” Dr. Ng’andu said.
The IMF office in Lusaka the capital does not have a resident representative after Alfredo Baldini was recalled to Washington mid-2019.
“On the basis of the Mission’s outcome, Zambia will now discuss with the fund on an appropriate macroeconomic framework that may lead to an IMF programme,” Dr. Ng’andu said.
There have been various calls from the private sector for Zambia to quicken getting onto a bailout package which would lead to a confidence injection and investor flows into the copper producing nation. A program would lead to more favourable pricing in the dollar bond market to increased Zambia’s chances of refinance soon maturing Eurobonds. A package also increases its chances of a multilateral guarantee on any sovereign capital market issuances.
Zambia has grappled with getting onto a $1.3billion bailout package for close to 3 years which has grown investors weary of sitting on the fence. The copper producers dollar debt is the worst performing of all emerging market assets at spreads of over 3700- 4600 basis points as it deals with balance sheet vulnerabilities exacerbated by rising debt, energy bottlenecks and the impact of disease pandemic on the business ecosystem. The IMF has forecast that Zambia will recede to -2.6% in the year 2020 as business disruption weigh growth momentum. Fitch rating agency lowered the copper producers long term issuer rating to ‘CC’ from ‘CCC’ aligning to Moody’s Ca from Caa2.
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