Three days after being sworn in as Zambia’s 7th Republican President, Hakainde Hichilema has exercised his instruments of power by entrusting Dr. Situmbeko Musokotwane (65) as Minister of Finance. Anxiety continues to grip citizens and outside stakeholders as to who will be on the new head of states cabinet. Musokotwane take over from Dr. Bwalya Ng’andu who led the finance team for the last 2 years.
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The copper producer is at a critical stage of its economic life cycle marred by elevated debt in excess of $12.97 billion scaling the nations gross domestic product over 113% amidst a debt restructure program following default on coupons on dollar bonds in pandemic era. Inflation remains elevated at two decade highs of 24.4% (August) as growth remains constrained in a suppressed environment. What arguably remains key for Musokotwane delivery is closure of an International Monetary Fund – IMF deal which is the copper producers precursor for successful debt restructure which inturn will allow rating agencies to improve the Zambia’s credit rating from default status on the foreign currency Long Term Issuer Rating – LTIR.
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Musokotwane being pro-Bretton Woods is the copper producers best bet to accelerate sealing of an IMF deal which he has strongly advocated for since 2011 when the reserves started to fall signalling the genesis economic malaise. It is evident that his recommendations for Zambia to get onto a program were ignored by previous regimes in an era that saw the raising of dollar bonds whose stock at $3 billion adds to external debt whose repayment falls due 11 months away for the $750 million while the $1 billion and $1.25 billion mature in 2024 and 2027 respectively. Expectations remain high from the MinFin Head as he will be expected to execute the macroeconomic framework agreed with the previous head in March so as to expedite conclusion of an Extended Credit Facility – ECF.
Dr. Musokotwane is said to be one of the strongest Secretary’s to the Treasury alongside one of Zambia’s legendary Finance Ministry heads Ng’andu Magande, in the period 2003-2008, that saw the red metal producer attain the Highly Indebted Poor Country – HIPC initiative World Bank initiative a stepping stone to middle income status.
With a pedigree of excellence, he has served as Minister in the Finance Ministry 2008 – 2011, Special Assistant to the President for Economic Affairs and Deputy Secretary to the cabinet for Economic and Finance, Musokotwane a PHD Monetary Economist (from Konstanz University in Germany) brings immense experience obtained from his stints both on the monetary and fiscal side. Prior to his government service he served as Deputy Governor Operations at Zambia’s Central Bank and IMF Advisor.
The budget cycle period and criticality of continuation of talks with the Washington based lender are likely the key drivers for the naming of a MinFin Head ahead of the full cabinet appointment. Inferring from President Hakainde Hichilema’s inauguration speech, Dr. Musokotwane will be his key man in attaining economic turn around promised to the Zambian citizens.
In the labyrinth of debt restructure efforts as economic malaise persist that has seen the cost of living scale higher, metal prices remain healthy which could be Zambia’s bellwether for a economic rebound which the nation will look to Musokotwane to achieve.
The Kwacha Arbitrageur
