According to a press brief from the Ministry of Finance in Africa’s copper producer Zambia dated June 18, K10.1 billion worth of debt was serviced in the January to May 2021 period. This accounted for 20.2% of the total expenditure in the review time frame the brief carried.
Of this stock of debt, domestic obligations totalled K8.0 billion of which 1.1% related to commercial bank facility related principal repayments while the remainder was highly likely channelled towards domestic arrears and other repayment obligations such as government security maturities whose decomposition quantum was not specified.
The treasury brief revealed that K2.1 billion ($93.3 million equivalent) of external debt service was liquidated of which K781.2 million ($34.7 million) covered principal repayments.
Zambia’s revenue and grants were 43% above projection and as such helped absorb domestic and external debt service obligations. The revenue side was supported by outperformances in the tax collection faculties as economic activity started to rebound in addition to healthier red metal prices scaling mining tax proceeds.
The copper producer is in the middle of talks with the Washington based lender, the International Monetary Fund which remains precursor for successful debt restructure, managed by Lazard Freres a French investment banking firm, with external creditors.
Zambia is one of the continent’s nations heading to the polls this year while it has remained in the spotlight after being the first defaulting nation, on its coupon payments on its dollar bonds maturing 2022, 2024 and 2027, in a COVID19 pandemic. The Southern African nation however remains well posed for an economic rebound, an opportunity provided by rising metal prices and a positive agriculture outlook despite downside risks on sovereign risk posture.
The Kwacha Arbitrageur
