A team from the International Monetary Fund will arrive in Zambia on Wednesday to discuss “challenges” facing Zambia, buffeted by the kwacha’s record slump as a drought, electricity shortage and falling copper revenue weigh on government finances.
The IMF staff team will visit the country “at the invitation of the authorities and as part of the ongoing dialogue,” Tobias Rasmussen, the Washington-based lender’s resident representative in the capital, Lusaka, said in an e-mailed response to questions on Tuesday. It will “review recent economic developments and discuss with the authorities their policy responses to the macro-economic challenges currently facing the country,” he said.
The kwacha weakened as much as 7.2 percent to 14.605 per dollar on Tuesday before paring losses to trade 3.5 percent weaker at 14.0923 by 5:25 p.m. in Lusaka. The currency of Africa’s second-biggest copper producer has lost more than half its value this year and may extend the decline unless the government seeks IMF help to restore confidence, according to Paarl, South Africa-based NKC Independent Economists.
A record 3-percentage-point increase in the benchmark lending rate by the Bank of Zambia on Nov. 3 failed to stem the kwacha’s plunge. The bank increased the policy rate to 15.5 percent after the inflation measure doubled to 14.3 percent in October, fueled by the currency’s depreciation. While central bank Governor Denny Kalyalya said the nation could benefit from IMF support, authorities have so far resisted turning to the lender for emergency loans, selling Eurobonds instead this year to raise funding for the budget.
“They’ve been quite vocal about not needing the IMF,” Irmgard Erasmus, an analyst at NKC, said by phone. “We differ from that. With rising global headwinds and commodity prices being suppressed in the medium term they might not have a choice but to ask for IMF aid.”
The kwacha’s collapse is wreaking havoc with the government’s debt ratios, according to the World Bank. Total debt may reach 56 percent of gross domestic product by the end of the year, Gregory Smith, an economist with the Washington-based lender, said on Nov. 6, when the currency traded at 13.11 per dollar. In June, before the kwacha’s rapid depreciation and the government’s third Eurobond sale, the ratio was about 32.7 percent, according to Finance Minister Alexander Chikwanda.
Yields on Zambia’s $1.25 billion Eurobonds sold in July and maturing from 2025 soared 34 basis points to 11.57 percent on Tuesday. The nation has $240 million of interest payments due on foreign debt in each of the next seven years, according to data compiled by Bloomberg.
Seeking IMF help “won’t be their first choice but we don’t see them as having any choices left,” Erasmus said. “Sooner rather than later, getting the IMF involved will be the better course of action.”
Source:Bloomberg News
Enslavement! You see now PF the consequences of your incompetence!!!! PF has in 4 years managed to prepare the road for our enslavement to IMF. Mwanawasa and Magande managed to free us (at least 75%) from IMF enslavement. Now PF has finally cleared the way for re-enslavement, from which we will never recover, unless we get another “Mwanawasa” in state house and another “Magande” in Ministry of Finance.
Firstly Mwanawasa never won the 2001 elections. The result was stolen from Mazoka. Do you want a repeat of that? If Magande were really an excellent minister of finance, why is he not in an advisory capacity serving another country or big conglomerates? At best Magande is broke this time!
So the point is, the decade 2000 to 2010 was a boom one for Zambia. This is when all major investments in export production had materialised. PF’s sin now is not to have recognised that, thinking that the boom was to go on three decades or more!
The problem is Chagwa, we have to change otherwise kwacha will continue falling. Edgar does not inspire confidence to the market. We heard his rhetoric on the Copperbelt. The man has no clue that as president careless talk such as price controls, nationalization will aways unsettle the markets (PF cadres, I am not talking about Soweto or Chisokone markets)
We told PF it was impossible for anyone to borrow his/her way out without a concrete plan how how to pay back the loan. Now PF is intensifying borrowing for consumption by supporting the budget using borrowed money. The odd that PF is facing is that the 2016 budget has lost over 30% in real value before it is even implemented. At this rate the budget will lose even further probably hitting 50% lost. This will imply 2016 budget by value will be far less than 2015 budget. Chikwanda needs to reverse the budget and re-budget removing all expenses which can be suspended, if next year’s budget is to serve any purpose.
@Nsimbi, firstly my interest was not to judge how Mwanawasa became president, But how he positioned himself and his key cabinet ministers to manage well the “boom of 2000-2010” you refer to in your comment. Secondly, your observation that “PF’s sin now is not to have recognised that, thinking that the boom was to go on three decades or more!” is exactly my observation and that makes PF’s state house and Min of finance very different of that of Mwanawasa and Magande. It is about competence. Competent managers know how to survive and cushion companies even in a crisis.
I am not sure Zambia has a government, but a PF campaign team. The only things IMF will hear will be 2016 elections, HH, Nawakwi, The Post Newspaper.
If you look at that graph. That PF cabinet need dissolved next week.
Ba Lesa bafulwa nomba. He wants the nation to be on its knees and stop thinking using tribe while pointing at others for practicing tribalism. Nothing is working until we have made the right choice. God can never be mocked by cadres and thugs masquerading us leaders of God’s people.
When God has favoured his own, he creates booms in metal prices and others. when he doesn’t favour the incumbent regime, he creates wars, drought, famine, violence and crime to make the government unpopular for it to be removed. he even many times clouds the minds of our leaders like he is doing today to Edgar Lungu to make him make bad decisions like appointing a journalist and a fake bishop to sort out the critical energy sector. That is now God.
Borrowing from IMF in the offing!
This why I have been saying ECL should not be underestimated 2016 election-wise. He has some surprises up his sleeves. These dollars are to be borrowed to falsely stabilize the economy by temporarily bringing down the exchange rate around April – Sept 2016 to aroound K8:$1 to hoodwink gullible voters. Then they’ll swank that Ifintu Ni Lungu has now settled in his chair & has turned around the economy. Because of these cosmetic actions prices will come down tumbling temporarily. Nothing wrong if economic turn around is real! Yet even ECL himself knows that those actions are cosmetic & after, God forbid, winning re-election things will go back to worse cos they wud hav done nothing tangible to turn around the economy.
Their preoccupation is just…
Their preoccupation is just re-election. So all Presidential aspiring candidates must bear in mind that next year’s election is a tricky uphill battle if they were hoping Kwacha will still be weak.
Mr NSIMBI whatever you are please be since and accept that LPM and his team were 100 times better than your visionless PF. Did you hear Magande go and borrow EURO bonds or borrow from multilaterals or bilaterals never, because they were prudent economic managers. There was no boom in the period you are talking about buts simply serious and knowledgeable Governance did the trick. You have destroyed this country ba PF something you must accept and vacate the office. Stop looking for silly excuses.
There you are Zambians, your govt is now contemplating kaloba, due to its wreck-less borrowing and spending. This is as a result of putting in people with little economic understanding. Sata was clueless about issues of the economy, all he knew was bollowing and spending, but to make matters worse, you repeated the same mistake of ushering in Lungu, a man whose understanding of modern economics is very doubtful. So now, you already have in excess of $7 billion in debts, if you borrow extra more from this ruthless organisation called IMF, where are we going to end up as a nation? Its a shame. Anyway, I do not blame PF but those Zambians who vote based on tribal grounds and not merit.
Im sorry, but this looks like a nation under judgement. Those staged prayers will not help you. Tribalism, nepotism, corruption, insults, blasphemy, double-standard pastors, thieving, etc,. etc,. are all being judged. I feel sorry for those pastors who actually thought that God could be manipulated by evil politicians.
Whoever reads the Bible correctly know that the Lord’s blessing maketh rich and He does not add any sorrow to it. This my friends is judgement. Remember the siege in Israel? False prophets were telling the people that all was well, but the true prophets of God told the people that they were even going to eat their own babies, and it happened just like that.
knows…
Oh, and for those who think its because of lower copper prices, or this and that, thats not true. The Lord has power to give or withhold the rains. He can make a nation great or small. If what we need is copper to make us rich again, then the Lord has the power to supply us with abundant minerals, rain and everything we need to prosper.
Our leaders have turned a blind eye to the cries of the widow, the poor, the under privileged. Do we really expect God to still bless us with all that tribalism and evil living. Zambia has knowledgeable people and trustworthy individuals who can turn this situation around. Remember God uses people!! Time for manna falling from heaven ended when the Jews entered Canaan. Now we must work diligently because the Lord hates laziness.
Cry the beloved country.
These are tough times for Zambia because of the reduced commidity prices,the PREDICTED drought and the strengthening of the US economy thus increased interest rates in the US. All this is not Lungu’s fault but whats his fault is he has no vision,does not inspire leadership and living large in spite of the economic conditions.When a ship is sinking theres no point blaming the storm what you need is the captain to come up with radical ideas to save the passengers.Zambia is sinking..and Lungu has sent an SOS to the murdering pirates- IMF.Its better we sink and those who can swim make it to shore than to be slaughtered by the sword of the IMF.
Cry indeed! What a shame, mother Zambia is on its knees 🙁
I remember my horror a few years back when I read that the IMF SAP had failed in every economy they intervened in 100% failure rate….so right now reading this im like ok e fintu ni lungu ifi come on Zambia we have kicked out a stronger more ideologically astute KK …..Lungu and PF ni supu we can kick them out for oncompetence
@ Napapa mwanawasa and guy Scott were the best head of states Zambia has ever had . it will take 7 years for kwacha to go down as it was in 2002 , Ba lungu has never ever opened his mouth about the currency kwacha collapse .
What about the South African Rand which is now pegged at R14.22 to US$1 from R7 to US$1 ? I know that Ghanaian currency is also under very intense pressure. Does it mean all these countries have something in common other than the low commodity prices? I smell some rat somewhere.
Let the economists tell us what is causing this rapid depreciation of these once strong currencies. How come the Kwacha, Rand and other currencies dont appreciate that fast when all things are equal?
Bank of Zambia guys, start working and stop drinking too much coffee in those offices.
Rand from R7 per USD$ to R14.22. Now do the maths here.
Zambian Kwacha has increased from K7000 to K14000 while the Rand from 7 to 14.22.
Meaning that Zed Kwacha is increased 7000 steps while the rand has increase 7 steps. Do not forget that our kwacha has zeros but they are just hidden.
Secondly Zambia imports most food from SA, including chips and we deliver raw copper to SA which they purify for us. 3rd South africans use their domestic produced products like agriculture, soapo, books, cars, etc while ifwe we import most of these commodities.
do not compare South African economy to ours instead let us work hard and smart to manage this economy
@UFO. The rat you are smelling is in State House! All the currencies mentioned are falling against the dollar, such as the Rand & Kwacha. However when you compare the Kwacha against the Rand, it is losing as well. 4 Months ago the Kwacha was 0.52 against the Rand. You needed 52ngwee to buy 1 Rand. Today you need K1.01to buy 1 Rand!
The explanation is that there is a lack of confidence in the economic managers of our country. They have not put in any measures to arrest the situation. The Chief Govt spokesman only tells us that “even our neighbours are having problems..”. Hardly an answer to inspire confidence in an investor. The result is that those with money rush for the US Dollar as a refuge, hence loss of value of the Kwacha. It is a lack of confidence in those managing our economy…
House fly, you need not worry it is just that the PF cadres are running out of ideas. All they can do is compare to a number who is far much better than themselves.
It is a reflection of the loss of confidence in those managing the economy. For example BOZ Gov tells Govt to reduce on expenditure. What is the reaction? ECL creates 5 more Ministries, appoints DC’s, hires private Jet to USA with Mampi, JK and 250 hangers on! To make matters worse, ECL threatens millers & Mines with nationalisation of their mills; introduces subsidised Mealie Meal @ K45, etc. How do you think investors will react? With-hold their money of course and those thinking of investing will think twice. Moody will downgrade the Zambian economy. And Govt will blame the opposition as usual, when they are the ones making these pronouncements. Govt made simple! PF has failed.
Typical Zambian thinking. My dear an economy like ours cannot be compared with S. Africa or Ghana. South Africa is flooding our my markets with their goods and if their products are cheap because of weak currency then they will sell more. If their import is less than export, in other words export >imports, then they tend to gain more. In Zambia we import even a tooth pick, how on earth is a weak currency going to help us. If you remember very well sometime last year the U.S.A could not compete with China on the world market because China had devalued its currency a little bit. The implication of this scenario was that more Chinese goods were bought on the world market than that of the U.S.A because they were relatively cheaper.
it will be very funny if Zambians vote for Pf in 2016 , 90 % of Zambians are suffering because of lack of planning and corruption . 100% of all Pf ministers became rich once the get into government and scared of telling there boss about the economy of losing the jobs . load shedding does not choose if you Pf ,UNPD,FFD OR ANY TRABIE .
Copperbelt will always vote and the reason they will give is that bala tupoka Ichalo. They think Zambia is theirs and they are king makers. I was privileged to work on the copperbelt for more than 20years and I know very well how those people behave. They think they are more Zambian than others. They really deserve what has befallen them. I am partly happy that because of PF am now in Diaspora.
the IMF should remind PF ati poor governance includes using state institutions to pursue political enemies–really bad bad for business and contributes to a plunging currency! change your tone ba pf. ichalo lifupa.
We have basically lost it as a Country. Need urgent Remedial measures which unfortunately the PF are scared to implement. Leadership failure partly to blame.
Comment: Due to lack of confidence in the PF gov’t by almost all sensible stakeholders, everything that the PF does fails. They will bring all sorts of people to try and sort out the mess, but nothing will good will show.
Kambwili & Mumbi Phiri. Can you please comment? Ati “it is happening everywhere”! You incompetents!
We really need to change the way we do politics. Zambia is headed for a serious disaster. The implication from what I gather is that we have failed to run our economy. We are hiring experts from other countries to save our economy. This is shameful. Right now I am in a foreign country and to be honest with you am really ashamed to be a Zambia. I don’t know how the president is feeling but this situation has dug a huge scar in his life. He will go down in history as one of the presidents who failed to run an economy of the country.
During 2015 election I was on the copperbelt province of Zambia and a number of people I discussed with said they could vote for a particular political leader on account of tribe, most surprising, even the educated were saying the same thing.
Teachers on…
@Bright, I hope people are regretting in shame for voting based on tribe. They thought they would be buying from different shops. They thought it would be “apartheid”. This tribe can buy from this and that shop at this and that price.
Umu tonga ukuba president? iyoo.
Okey Ooo.
Denialists will continue denying PF has messed up our country. They will continue talking about the rand, cedi & accusing imaginary schemes for wrecking this country’s economy.
The clueless drunk & senile ABC are the ones to blame.
Phew! Its taken 24 days for the first sign of prayers being answered. Amen.
“If you look at that graph. That PF cabinet need dissolved next week.”…………………..
No, Lungu and Chikwanda need to be arrested and put on trial for treason! We cannot allow them to get away with destroying Zambia while they live in luxury on taxpayers money.
If Sylvia can be prosecuted for ABUSE OF OFFICE, so can they. And they have a lot more than her to answer for.
rough roads ahead – the blame game wont help us now. we must all work hard, save, and make a future – we can’t rely on the government or IMF to change our conditions.
For us who lived under KK and the IMF policies, this is bad for Zambia. Those who were shouting ifintu ni Lungu now will have to tighten the belts as KK used to tell us. it seems from he article Zambia has no option but to swallow the IMF pill sooner than later. But the best option Zambians have is to throw out Lungu sooner than later. IMF has to be bold and tell Lungu and PF to reduce the bloated cabinet. No increase to ministries and no deputy ministers. No ministers and other PF cadres going to KK airport to see Lungu off and back. No rushing politicians to South Africa and India and no foreign trips for MPs & no many trips for Lungu either. No unnecessary bi elections and no ministerial cars etc.
oh, i forgot one important point, no borrowing for PF budget consumption. i think i ca also add no wasting tax payers money to fight the watchdog or the post or opposition politicians
For Kambwili: Since the economic problems Zambia is facing now are global, everywhere (e.g Southern Africa) then we expect the IMF to visit entire Southern Africa and hold talks with Govts.
@Napapa Sana, and rightly so, IMF is to visit the entire Southern Africa. Trust me some people will believe it if he said it on the radio.
Zambians let me tell U! You made a terrible mistake voting for a SNAKE in 2011. Sata’s mondus operandi was “Do things first and Think later”. Now you are going to enjoy the pain of your WRONG CHOICES. Chiluba and Kaunda once said “sata cannot be president ” but zambians never listened. He simply had no credentials. The economic problems zambia is facing have little to do with the chinese. It is 80% to do with MANAGEMENT. Sata was never a manager. He was just a ” loud ignorant orangutan ” who excited pipo with uselessness and left us problems. I hope his soul is resting in peace, which i doubt. Zambians learn to elect proper leaders, not because he bought u beer or he is your tribe. No tribe has monopoly of leaders. A leader can come from anywhere.
A leader can also come from Southern Province?; no way
I couldn’t agree with you more…
Kids…your prayers have been answered your slave masters are back in town. If you have never lived under SAP you will soon know it.Just 12 months ago you were shouting “infinity ni Lungu” from your cars.
They were even shouting “kolopa”. The govt. accounts have been “mopped” out of money. PF cadres were even beating marketeers who pointed out the source of their poverty.
Mulempapusha nefintu efyo mulemona takuli infula ati ni lungu,umutengo wa copper ukuya mpashi ati ni lungu let me tell you lungu has tried and u cant much with what hh could have done.its not the degrees working its nature.if you want to see the worst put hh & his seventhde u will see healing taking place within a year.he will sing aboutt pf without action and less than two years pipo wil get fedup & get rid of him.mark these words.hh is volatil and even more careless than lungu.its not like running a daily farm the economics he uses at his farm u think can work at national.greece had challenges they never blamed the president instead re elected the same president bcoz he understood the current problem.it will be sucido to choose a new president.lungu we shall support u.
@pombolo, wanza weyi. If that is what u do among your likekind, HH is different. After all lungu got nominated by fluke in kabwe. We all know that.
@pombolokaiwe. It is becoz of thinking like yours that we are in this mess. You see nothing wrong with the way Lungu is running the country? Prudence is required in a time of austerity. BOZ Governor tells ECL to reduce govt expenditure. Reaction?
1.ECL creates 5 New Ministries plus Perm Secs, Deputy Min etc with attendant costs.
2. Why not charter a plane to USA with JK & Mampi plus 250 others (with costs)
3. Sata made 6 foreign trips in 3 years. ECL is standing at 19 in 9 Months (with costs)
4. Why not go for a “working” (more accurately campaigning) trip to CB? Plus Ministers who get $500 per day allowances, etc
5. Why not threaten the investors with nationalisation? (Oh I forgot this will affect the Kwacha!). etc
I found myself packing for the airport when I read this and then realized I am already out of Zambia! When you have gone through SAP austerity you don’t want that nightmare ever again! Phew! All I need to do now is reduce my remittances. Good luck to Zedians!
Wandepula…..I like that!!
Both the Kacha and SA Rand have depreciated by 100% this year. So what is the problem here. It’s not only in Zambia
HH, your reasoning is very disabled. So if your neighbor’s daughter gets pregnant at an age of 17 while at school then it’ll be also ok for your daughter when she does get pregnant also since “ba neighbor also is going through it”? Learn to set your own standards you retrogressive chap, ata!
Sadly, welcome back S.A.P. Satana ali pano. Hon. Chikwanda MP without any constituency well done! You sir have the honour as minister who has preceded over our country’s economy twice and twice you have been responsible for bringing the dreaded IMF in our country’s lives. I hope your children and children’s children will bear your name for a long time as a reminder of the garbage that you are!
Fellow Zambians, forget all this politicking. Its time we stood together and said enough is enough. We want competent people to run our country. After 51 years of independence we have nothing to show but increased poverty and suffering. We are in the 21st century…does it matter which tribe runs the country…NO! It must be the best people to do the job, irrespective of what tribe or political party they belong to. These current leaders are enslaving us in poverty because they are clueless! Come on brothers and sisters!!!
@Localboy, you are right. Next year we travel to vote. By the way, when will the tripartite elections take place?
Before running to IMF, the PF govt shud have
– drastically reduced the bloated cabinet
– cut unnecessary by-elections i.e. Kasama in waiting
– stop intimidating opposition as it costs money to deploy police
– & cut unnecessary travels
I hope IMF puts these as prerequisites.
People, lets not just talk. We need to form a strong Political Party to take over this country. Politicians with big brains not these political parties we are seeing currently who are just blaming, insulting and recycling same failures.
@Senior Citizen, you are addressing people in the diaspora so how do you suggest we do it. I for one am not prepared to give up a paying job to go and face unemployment with no money in my pocket. Who will even listen to us? Just be another Muliokela “diaspora” party.
Unfortunately blaming is part of the political dirty game.
Right now we have UPND which is promising and should be given a try.
Now Zambians will also cry like RB did.
This after the National Prayer day?
@Awe Mwe, lol. Imagine. The Bible is clear God is not mocked.
The church elder who stood in the pulpit and said all those with “ilomba” shall burn. We all know how that ended.
Church elder by late P K Chishala
Anyway, whatever the case might be regarding the strength of our Kwacha, we all need to realise that the dollar is just one other currency like others and sometimes, the dollar trades very badly on the global scene. The difference with our friends in the US is this one such issues arise, they put their differences aside and focus on patriotism. What we see in Zambia on the contrary is like the world has come to end simply because the Kwacha is not performing as expected against the dollar. The question one should honestly answer is, what if the Kwacha regains against the dollar, what will the pessimists say or do about the well being of our economy?
My strong belief is this, the Kwacha will rebound in the next few months before March 2016 but as usual, Zambians will still be subjected…