Dear Editor,

Chikwanda was telling us we will have 7% inflation. It is more than THREE TIMES that now.

I have not heard a single word about the massive debt and how Zambia is going to repay it. Now Citigroup and J P Morgan are closing in to feast on rich pickings for themselves all because of PF stupidity. We will be paying for generations to come.The IMF will come and will lend us money. And these banks will then take it back in interest payments while Zambians continue to struggle in poverty!

Thankyou Lungu! Thankyou Chikwanda!

Citigroup, JPMorgan Favor Zambia’s Dollar Debt in Bet on IMF Aid

Citigroup Inc. and JPMorgan Chase & Co. are among investors stocking up on Zambian dollar debt, anticipating that a growth revival and an International Monetary Fund aid package will help the southern African nation plug its yawning budget deficit.

Citigroup started adding Zambian debt on June 10, while JPMorgan moved its holding of the nation’s dollar bonds to overweight, seeing room to “earn considerable pickup” amid signs of an improving economy. The bonds returned 7.3 percent in June, the most among 18 African nations monitored by Bloomberg.

The yield on Zambia’s dollar bonds due in 2024 has fallen more than 500 basis points from a February high of 16.3 percent, but is still more than 3 percentage points higher than that of debt by similarly rated Ethiopia. Ranked five levels below investment grade by S&P Global Ratings and Fitch Ratings, Zambia, heavily reliant on copper, expects negotiations with the IMF to start in October and move to board level in December.

“We continue to like the position” in Zambian bonds, said Luis Costa

With developed-nation yields likely to remain lower for an extended period after the U.K.’s vote to leave the European Union, Zambian debt offers returns that are hard to find elsewhere, according to Citigroup.

zambia yield

“We continue to like the position” in Zambian bonds, said Luis Costa, Citigroup’s London-based chief strategist for eastern Europe, the Middle East and Africa. “The IMF deal is a supportive factor. From the risk-reward point of view it is a very interesting long, despite Brexit.”

The yield on Zambia’s Eurobonds due 2024 dropped 6 basis points to 10.57% by 3:35 p.m. in the capital, Lusaka.

While the southern African nation has said it expects an aid program from the fund by the end of the year, a deal may not be that easy as it’s likely to require the government to cut energy subsidies. The IMF in March estimated the payments could cost the Zambian treasury $660 million this year. Increasing prices at a time when inflation already exceeds 20 percent may be unpopular in the build-up to general elections next month.

Better Rains

The 2016 budget shortfall will probably be slightly smaller than last year’s 8.1 percent of gross domestic product, Deputy Finance Minister Christopher Mvunga told reporters in May. That’s still more than twice the 3.8 percent deficit Finance Minister Alexander Chikwanda targeted in his 2016 budget statement.

JPMorgan sees a stabilizing exchange rate and improved rainfall supporting Zambia’s economy, while expecting that fiscal austerity will get the government through the coming months. The bank expects the fiscal deficit to remain below 8 percent of GDP in 2016.
President Edgar Lungu, who will seek re-election in Aug. 11 polls, said in May the country will only access IMF support if the lender’s conditions are acceptable, and not all investors are convinced about the positive outlook for the nation’s debt.
While Zambia’s Eurobonds have remained buoyant, underpinned by anticipation of an IMF support package materializing within months of the new government being formed after the August vote, the optimism is misplaced, according to Rhombus Advisors LLC, a consultancy that advises hedge funds and private-equity firms on African economies.

Zambian ‘Ambivalence’

Given “the ambivalence of local authorities, we have considerable reservations about any investment strategy that is dependent on an IMF support package,” Omotunde Mahoney of Rhombus wrote in a research note on June 21. This “would set the stage for a potentially significant correction in Zambian asset prices.”

While there may be delays on the path to an IMF agreement, demand from China will support the copper price, buoying the economy, which relies on the metal for more than 70 percent of export revenue, said Lutz Roehmeyer, director of fund management at Landesbank Berlin Investment.

“We are positive on economic growth and expect normal demand for commodities,” said Roehmeyer, who is overweight Zambian dollar bonds. “African exporters should perform well with rising commodities.”

Source: Bloomberg news

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32 COMMENTS

  1. Sontapo is a reincarnation of Donchi Kubeba…. It’s all deception, lies, dupery, slyness, con artistry that is the lifeline and hall mark of PF.

    Everything sontapo is built on a big lie…..sontalling things that are fake as they are from choking kaloba or debt.

    Sontapo = Donchi Kubeba 90 day lies!!!!

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    • What the western banks are saying in other words is that they are getting more comfortable with Zambia’s future economic performance because Zambia has fallen into an IMF/WB straightjacket of fiscal responsibility. Zambia has lost all the economic independence that we painfully went through and almost achieved in 20 years of MMD. It is all gone and blown away by 5 years of recklessness by PF. Just for Chakolwa’s K23m fortune in kickbacks and backhanders, Zambia is back in the shackles of the IMF and western banks.

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  2. What is the dear editor chap complaining about when the economic forecast is positive? The article is wrongly titled

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    • Read the article before making such dull comments! Those financiers have seen that Zambia is headed for AN IMF BAILOUT and and going to make billions at our expense!

      A Structural Adjustment Program is coming with austerity measures that will cause huge suffering and poverty.

      And Lungu and his PF are doing their best to hide it away until after the election. There will be no job creation only job losses, and the Kwacha will be as worthless as the Zimbabwe Dollar!

      This careless borrowing by PF will kill the economy.

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    • King Kaloba u r the dull one. Who doesnt kno abt possible IMF? The Govt has bn transparent abt it and investors r positioning themselves to pump in money in a stable economy. Read with ur eyes pls not strange emotions

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    • Stay out of conversations you have no knowledge, this is beyond you evil cadre. Leave this conversation to the educated. Learn to be quiet when it’s too technical for your level.

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  3. PF vuvuzelas are quiet because they dont understand this complicated language for advanced brains.For them,its life made simple ati “sontapo”.*****s…

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  4. SO WAT POINT THIS GUY IS TRYING TO BRING ACCROSS, CONTENT AND HEADLINE MISMATCH……#ECL

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  5. THE TRUTH IS PF HAS LET DOWN THE ZAMBIAN MAJORITY. WE WILL CALL THE GUYS TO EXPLAIN AS TO WHY OUR ZAMBIAN ECONOMY HAS SUNK DOWN SO FAST. IF THEY FAIL, THEY HAVE TO PAY US BACK. GOD OF MERCY WE NEED A LIBERATOR FROM THE MESS BA KABOLALA THIEVES HAVE STOLLEN. NOWONDER KAMBWILI HAS LEFT HIS CONSITUENCE AND RUN AWAY SO THAT HE WILL BE REQUED IF HIS CHAKOLWA GOES THROUGH.

    UPND IS GOING THROUGH. THE GAME PREVIOUSLY, WE HAD THREE STRONG PARTIES MMD, UPND AND PF BUT NOW PF IS FIGHTING WITH THE STRONGETS PARTY UPND AND THEY KNOW WELL THAT NATULUSA.

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  6. UPND as usual.looking for bad news to.the extent that they even.misread positive assessments about Zambia’s economy. No wonder some people call them blood suckers.
    If you cannot this article, ask your economic manager to interpret it for you. At least he will tell you to strategically keep quiet because it actually favours the PF.

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  7. The fact that intermational financial.experts like JP Morgan want Zambias bond is a sign.that they still.have confidence in Zambias economy. The yield that they are talking about being higher for Zambia than ethiopia is a signal that they think.Zambia more creditworthy.

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    • At Terrible, you are very dull my friend, which school did you go too?..I cant imagine you are human with a brain….I think most of you here must stay away from commenting on issues you have no clue about…So tell me, who gets attracted to a poor low interest rending or turnover in a real time rational market?…go to bed bed and wank your self just like King Kaloba and HH wala wala..

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    • These komboni idyots should give us a break and just concentrate on killing each other for wearing political regalia. Who is more creditworthy, somebody who can borrow from the bank and get cheaper money or a marketeer who gets money at 100% per month on kaloba? Do you airheads and dimwits think that kaloba is so expensive because it is a better investment for the loan providers? These Western banks are sharks and vultures. They are taking their chances with their dollars, like a showman feeding a crocodile by hand.

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  8. @5.1 Rainman, mine is a simple economics analysis. You will never understand economics as long as you think from a UPND point of view. You need to broaden your mind and stop thinking narrowly. Economics is a diverse subject and on many subjects no two economists share a common point of view. But in this case any proper economist will tell you that I am absolutely right in my analysis. Which investor in his right mind will put his money where there is high risk and mo good returns? Even HH will agree with me, ask him.

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    • @Terrible Dimwit: It is called taking one’s chances. It is a gamble. That’s why men sleep with prostitutes and hope not to get an STI and be robbed at the same time. The amount of money Western banks put in troubled economies like Zambia are miniscule in their massive portfolios. They can afford to lose a few billions in 2024 when Zambia defaults on the Eurobonds because their loan portfolio is in trillions of dollars. In the meantime they would have enjoyed very high interest yields while hoping the IMF can beat the political leaders into line to repay the Eurobonds.

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  9. Theories, theories theories. The PF government have got this studied and under control. The economic diversification strategy to be embarked on by the PF’s next tenure will heavily counteract the commodity based analysis in the statement at hand. What do you expect from the economy under the destabilizing influence of 4 elections within 10 years?

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    • What has this PF government got under control?

      Mealie meal prices from K35 to K120?

      Load shedding?

      Kwacha from K5 to K10 to the Dollar?

      Political violence?

      Corruption?

      Please have more respect for the Zambian people and don’t make stupid jokes like this!

      The only thing Lungu has got “under control” is his access to the public finances to steal more money. He is just too greedy to be satisfied with his K23 million!

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    • If you think HH will give you maize meal at a silver plater, your brains are suspended above your thick skull. If you are ignorant about Zambia’s rain pattern, your brain is scattered inside your blood system and if you think your copper price ain’t got anything to do with the dollar/kwacha relations, I am dealing with your body with a complete dysfunctional brain.

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  10. Oh sorry, I thought the article was extremely clear. The IMF austerity measures will directly impact our majority low income households as selected subsidies are removed, but the winners are the financiers or the lenders because as IMF hands us their ‘package’, then the country will have the ability to keep repaying the debt plus interest accruing on our wide array of all sorts of loans, chiefly being the Euro-Bonds. Not an article to celebrate over, unless ofcourse one is challenged in other cognitive functions.

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  11. Thanks to Chagwa for ushering in the newly amended constitution. The economic stability of a country is directly tied to the stability of the Government, favourable international markets conditions, diversification in the country’s economy and a sound fisco policy with efficient management of the macroeconomic and microeconomic fundamentals. Talk oh! Talk mother Zambia. Walk the Talk!

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  12. You must be a dreamer to think that you would set conditions for your borrowing. A borrower is a slave to a lender who first studies you before they wire you their money. How smart should you be as the borrower amid political pressure haunted by election after election. Most of you bloggers are victims of Kaloba, you know what I am talking about.

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  13. I am very disappointed with commentators both for and against for failing to state what the remedy should be to the help our country reduce paying more interests or take steps to generate more revenue from exports. Don’t tell me change of government because that will be just politiking as we know HH has promised to bring back Anglo American once in power and these are IMF people in disguise. So lets talk about solutions as Zambians not as PF, UPND,FDD or UNIP. If today you were put Finance Minister for this nation what measures can you immediately put in place to arrest this situation. Thorn in the flesh in his point 8 comment brought atleast something object and that’s the issue we should debate. If the current grz is doing something what improvement is need or in case of change what…

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  14. con’t. If current grz is doing something what improvement is needed or in case of change of government what does the new government need to do to secure the economic future of this nation. Lets remove hate speech and insults in our discussions. Politics should not separate us we are one people. Today the people we are supporting in different political parties in 2021 they will swap themselves so lets be wise. Insulting is as result of of failure to reason properly. If you think you are more knowledgeable humbly teach us what this article means. Insulting won’t benefit anyone at the end of the day. And just a point of advise theres no party that will stay in power forever and every opposition has a chance to win an election as long as they adquately convince the electorate.

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  15. look at chikwanda and all you can say is a dead brain, the only part of his brain that is still very functional is the corrupt part of how to enrich himself especially from the mines where the man has major interests and the euro bonds. we appreciate the roads ba lungu and chikwanda but at what cost??? all just for you pockets…

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  16. @ dominion, you are very correct. We should provide solutions to Zambias problems.

    But in order to do that we need an open debate and an assessment of the current situation. And that is exactly what Lungu and the PF do not want! They are doing their level best to make sure Zambians are kept in the dark to supress constructive debate. You only have to look at the PF record on debates and press conferences to see that is true.

    All the democratic gains we have achieved since 1991 are systematically being destroyed to enable this dictatorial Lungu to stay in power.

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  17. STUPIDITY OF THE WORST ORDER, JP MORGAN, CITIGROUP, ALL RATING HOUSES, PLUS TH GRAPHS
    THEMSELVES, INCLUDING THE WRITE UP DEPICT AN ECONOMY IN STABILITY, AND POIST FOR
    GROWTH. IMF IS SHOWN NOCKING ON THE DOOR FOR A PACKAGE, THE EUROBONDS ARE
    TRADING WELL AND PROFITABLY COMPARED TO OTHR COUNTRIES, AND ZAMBIA IS SHOWN
    AS A BETTR INVESTMENT CENTRE AFTER BREXIT, AND SOME FOOL POSTS FOUL LANGUAGE
    ON THIS ARTICLE BECAUSE OF HATRED FOR THE GOVERNMENT OF THE DAY. WHICH ECONOMY
    NEEDS FIXING? ITS THE COW HEARDSBOYS, WHOSE HEAD NEEDS FIXING.

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    • Ati “IMF knocking on the door for a package”……

      Chile, the IMF is a LENDER OF LAST RESORT! Countries that they help are BEGGARS that have mismanaged their economy so badly no other financial institution will lend them money. Like Zimbabwe.

      Ask Greece. See what happened to Argentina.

      If a country needs IMF it means that countries leaders have totally f**ked the economy up and are clueless on how to fix it. That is why Lungu and Chikwanda are hiding it until after the election.

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  18. ALL YOU SILLY UNEDUCATED DONKEYS WHO CANT READ AND INTERPRET FIGURES, PLEASE LEAVE
    ECL AND THE PF OUT OF YOUR IGNORANCE. COME 11 AUGUST, SOMEBODY IS HEADED FOR POLITICAL
    OBLIVION. FOR THE AVERAGE ZAMBIAN WITH NO SICIAL MEDIA AND A DIRTY KINGMAKER
    TABLOID, THE MARKETEER AND THE VILLAGER, WHO HAVE SEEN WHAT THEY HAVE NEVER SEEN
    IN 50+ YEARS IN ZAMBIA’S DEVELOPMNT, THERE IS ONLY ONE WAY FOR THEM TO VOTE.
    BUT FOR YOU DULL HEADS, KEEP YAPING, IT WILL TAKE YOU NOWHERE.

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  19. This article actually debunks whatever propaganda UPND is trying to portray about the state of Zambian economy. The article is actually saying that current policy combined with fiscal austerity is bearing fruit in stabilising economy; further austerity whether or not under IMF will only make economy more stable & attractive. The icing on the cake is that Zambia may not need IMF if exports to China keep on improving in boosting export revenue as projected. That is the Power of Prayer. God always answers. God Bless Zambia

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  20. Please zambians don’t understand such stories, this is politics time we need stories LIKE PF ABEIT WIN OVER UPND , UPND TO DISBAND AFTER 11 AUGUST, PF IS READY FOR ELECTIONS EVEN TOMORROW , such topics would be interesting and everyone can understand what u write not this CRAP

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