Africas second largest copper producer has formally requested for financing from the Washington based lender, International Monetary Fund (IMF). This is according to a press release on the IMF website dated 08 December, 2020. This package request is supposed to assist with the various reforms the copper producer is undertaking. The IMF team comprising Mr. Abebe Aemro Selassie, Director of the IMF’s African Department, and Mr. Alex Segura-Ubiergo, mission chief for Zambia is currently in Lusaka for two day high level discussions on invitation of the Zambian authorities. The fund is assessing the request.
Read: Zambia’s MinFin justify default on ‘dollar-bond’ coupon, IMF team expected next month
Zambia is in the labyrinth of a debt restructure process involving negotiation with various creditors to include Eurobond holders, the Chinese and other commercial lenders. The red metal producer, on November 13, defaulted on its coupon payment of $42.5million for a dollar bond maturing 2024.
Zambia hired Lazard Freres in June to help with restructure of its external debt as part of an IMF requirement to commence talks concerning an economic package. Eurobond holders on 13 November 2020 voted unfavorably on the Southern African nations consent solicitation request to have coupon payments on its $3billion for 6months totaling $160million.
Bearing the brunt of COVID19, Zambia’s fiscal posture has deteriorated with disease pandemic amplifying its balance sheet vulnerabilities. Debt to GDP has widened to 104% as inflation ballooned to 17.4% in a currency depreciating environment trading north of 21 for a unit of dollar, the steepest slide of all African currencies.
Securing IMF assistance will assist Zambia with improved balance of payment support, could improve the copper producers dollar bond pricing and will additionally meet the Eurobond creditors request to ease negotiations around possible restructure.
The Kwacha Arbitrageur.