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Wednesday, August 12, 2020

Stanbic Bank expects Zambia to seal an IMF deal by December

Economy Stanbic Bank expects Zambia to seal an IMF deal by December

Standard Bank which operates in Zambia as Stanbic Bank says it believes that Zambia will sign up to a financing deal with the International Monetary Fund as early as December 2016.

In a note to investors shortly after President Edgar Lungu’s re-election, the bank said with the PF win, most of the groundwork has already been laid.

“In preliminary talks with the IMF, Zambian authorities indicated that a deal in the region of USD1.2bn was in the pipeline. Earlier in the year the IMF indicated that its discussions with Zambian authorities were “to lay the groundwork for rapid action toward a Fund program following the Aug elections.” We thus believe that an IMF deal could be sealed as early as Q4:16,” said Samantha Singh from the Bank’s Research Unit.

“Of course, it is worth recalling that the government initially aimed to reduce the fiscal deficit to 3.8% of GDP in 2016 from a deficit equivalent to 8.3% of GDP in 2015, without the help of an IMF program.”

She however noted that sticking with that commitment proved challenging arguably on account of the pending elections this year adding that the 2016 deficit is likely to be 9.3% of GDP.

Ms. Singh said the administration will probably become emboldened by the election results, making it likely that it would adopt an aggressive, yet credible, fiscal consolidation path.

“If we are correct, such an IMF programme should boost confidence in Zambia not least because it would most likely commit the authorities to fiscal consolidation at a time when monetary policy is already tight,” she said.

Ms. Singh said additionally, the combination of tight fiscal and monetary policy would probably restrain unproductive imports, engender a narrower current account deficit and provide some support to the Kwacha.
“USD/ZMW, which was around 10.5 levels this morning, is likely to test 10 soon, before a slow march to the 11 level resumes. Domestic yields to ultimately compress while Eurobonds should benefit from the prospects of an IMF programme,” she said.

“Fiscal restraint under such an IMF program should also slow down net domestic issuance of government paper, and probably pull down yields at the long-end of the curve, making duration attractive. However, the market is likely to wait for evidence of a sustainable cut back in domestic issuance before yields compress significantly.”

She however noted that the external sector looking brighter saying despite a challenging global environment and domestic electricity supply challenges at the start of the year, copper production has held up so far this year.

“Additionally, the mining tax regime has become relatively stable, and a further sustained decline in copper prices appears less likely. According to the Chamber of Mines’ data, Mopani Copper Mines produced 21.2k MT in H1:16, which represent a 58% y/y decline as most of its mines remain on care and maintenance.”

She said it is unlikely that this pause in production will dramatically affect 2016 output.
“For the country as a whole, the production losses in the large operations have been offset by increase in production at Kalumbila and there are other the expansion projects going on in some of the other large producers. Hence, we expect copper production to increase to about 760k MT this year from 711k MT in 2015.”

“On the electricity front, we expect better rainfall and additional capacity in H2:16. The120MW Itezhi Tezhi power station was commissioned back in Mar while 150MW of the 300MW coal fired Maamba project was commissioned this month. All these suggest that copper production and exports, both in volume and value terms, will rise further in 2017,” she said.


  1. Wow to all those poor douls I saw celebrate a poisoned chalice in Luangwa,Wuakile and Ndeke for your day of suffering is written in blsck and white above. Mwanya……

  2. What are these funds from IMF going to be used for? To pay salaries, investment in power generation, road infrastructure or what?

    • Lungus bank account.

      Obviously the K 23 million he has already stolen from Zambians is not enough for this thief.

  3. We are ready atleast we won’t be ruled by the mujahadeen leader of the cowthern province. Let him continue ruling his dirty and smelly cows in that cowthern province

  4. Africa 100 years backwards indeed. Borrowing what you can’t pay back, the pain of paying back is effected on a common man. While the policians are eating well. Shame!

  5. Here we go again…Zesco is likely to be the next target of privatization. Wage freeze and Govt employments will also be frozen..Read about SAP’s in Africa and see if this IMF program has helped African countries.

  6. – ZESCO will be sold to ba mwenye.
    -TAZARA will be sold to tuma choncholi.
    – Teachers, nurses will be retrenched
    – Zambia National Service will be scrapped, unleashing dangerous criminals with military training onto the Zambians.
    – ZCCM-IH will be swallowed by Glencore
    – Fuel, electricity, fertilizer subsidies are going to be scrapped by December.

    MWANYA, WE WARNED U about IMF, but u voted PF becoz of u r TRIBALISTS.

    Continue dancing DUNUNA REVERSE as U continue suffering bcoz of PF/IMF Structural Adjustment Plan.

  7. @Homo Heidelbergensis Dna – The study of Zemuntu Resurrection, it is not right to demean others or other tribes. though i am not Tonga, I find your language in modern Zambia unacceptable. without cows and milk many of your family members and yourself would have died of malnutrition. Shame on you

    • @ KK Airport Cabinet. I concur with u. Such toilet language from Homo Heidelbergensis Dna is not necessary. Nothing justifies calling Tongas as such. Just plain Stup1dity in it’s purest form!!

  8. IMF again !! That is when you will celebrate better..Mukose bane. Negotiations were delayed because of elections..to the detriment of the economy. PF will tell us how they will pay back all this money.

  9. Unfortunately in Zambia support for political parties is like supporting a football team whose end always defines a winner. In politics the winning or losing starts after elections. Just like in business it starts after you pump in your money, when you buy that track and trailer. But in Zambia when you buy the track and trailer, people think you have arrived. Thats when the work begins baba, you will have taken the plunge and you have to swim harder other wise just keep your money and drink it slowly like misers do, and hope that inflation doesn’t drink it faster than you.

  10. IMF, we have seen this movie before. Normally by the end, all members of the audience are crying! Very sad movie indeed…. popcorns not necessary.

  11. IMF are devils ….GRZ definitely need to tighten there belts and I hope we can nw employ a proper finance minister once the useless old man is out …but IMF will destroy zambia i wish had the management and planning of MMD and lead by the late Levy cause PF is clueless

  12. UPND should not cheat people, even if they had won the elections IMF is inevitable for Zambia in this world economic environment.
    In fact it is a plus that IMF are willing to help at all.
    They do not help the hopeless where they cannot get their money back after their help is complete. Surely you.must have followed the Greek story with IMF. Ask them.

  13. Stractural adjustment program has been around since the time we were young in the 90s and up to now i have never seen the fruits….. bcoz it made my child hood horrible as my parents were retrenched without pay…..teachers were on strike the whole decade….. people have forgotten…..continue with dunuuna reverse and reverse us back to misery

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