LUSAKA (The Business Telegraph):- Africa’s second largest copper hotspot, as at end of 1Q20 owes K25.4billion ($1.27billion) in domestic arrears. This was revealed in a press release published on the London Stock Exchange website of a Q&A session between the MinFin and investors following a presentation by Dr. Bwalya Ng’andu on the 29 September 2020.
The domestic arrears number reflects liquidity that the state owes to the real sector of the economy which has ballooned over the years. Zambia recently approved an K8billion economic stimulus program funded through issuance of COVID bonds whose proceeds would absorb dues to retirees, suppliers and contractors. To date the copper producer has raised slightly over K5.35billion in cash terms.
Read also: V” shaped recovery for Zambia in the labyrinth of creditor engagement and debt management
Zambia’s central bank has been key at restructuring domestic debt through bond buy backs in part which swap short term for longer dated bonds which embarking on a simultaneous balance sheet expansion program supported by quantitative easing and government securities consolidation program. Total stock of outstanding bills and bonds according to the 2021 budget presentation widened to K114.3billion (June30) from K80.2billion as at 4Q19.
The red metal producer currently seeks interest payment reprieve for 6-months with its dollar bond holders between 14 October 2020 to 14 April 2021 whose initial solicitation was pushed back for lack of transparency on other creditor engagement and a clear debt redemption strategy. Mid year, Lazard Frères a French Investment banking firm was hired to restructure Zambia’s debt. In the labyrinth of economic woes amplified by disease pandemic, debt to gross domestic product has widened to 104% while the copper producer grapples with a currency rout and rising inflation.
The Kwacha Arbitrageur