IMF advises Zambia to delay re-financing $2.8 billion of Eurobonds

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Zambia should delay its planned re-financing of $2.8 billion worth of Eurobonds until financing conditions ease, an International Monetary Fund representative said on Monday.

“We would caution the government not to tap into the international markets at this time,” the IMF’s resident representative, Alfredo Baldini, told reporters during the release of an IMF report on growth in sub-Saharan Africa.

The Eurobonds were issued from 2012 to 2015, and the Zambian government planned to re-finance them with longer-dated bonds at a lower cost, Finance Minister Felix Mutati said on Dec 7.

“The financing conditions are pretty tight right now, and it will be very expensive,” Baldini said on Monday.

In fact, the bonds would only fall due in 2022, 2024 and 2025, so the government didn’t need to rush into re-financing them, Baldini said.

The Zambian government has relied on external financing as its spending rose over the past few years while revenue remained almost the same, which has put pressure on its exchange rate, Baldini said.

Mutati said last week the equivalent of 19 percent of Zambia’s gross domestic product was being used to service debt and the government wanted to reduce that to about 15 percent.

Zambia issued a $750 million Eurobond in 2012, followed by a $1 billion issue in 2014 and another worth $1.25 billion last year, mainly for infrastructure projects.

50 COMMENTS

    • +27
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      In simple English – the finance people working and looking after this don’t know what they are doing – IMF advises.

      We are relying on IMF to tell us basic economic decisions.

      The agony of employing people not fit to lace the laces of qualified economists and bankers.

      Lungu should always have been a pit stop.

      Thanks

      BB2014

    • +6
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      vote

      Uko!
      Visionless & violent PF bandits of Dagama Lungu~dununa reverse~ poverty load shedding Changwa njala, economy yafa. The country can’t economically suffer b’coz of violent & visionless PF bandits. Load shedding nayo yanyokola. Inswa, fulu~fute, rodents, dogs are vanishing~even inzhi~flies have started vanquishing. Yanyokola njala & dununa regret mwa blind Dagama Jameson hungover no plan.
      The Skeleton Key
      ~206~

    • +8
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      There’s a simple reason why PF wants to refinance now and not later, nearer the time when the bonds are due: they want more money to steal. Once the new money is raised, there’s no guarantee that PF can make an early repayment (it may not even be allowed according to the bond prospectus). Do you think PF will keep billions of dollars in a separate account waiting for the Eurobonds to mature? This is just another PF scam to steal from Zambians so that when the bonds mature, the refinancing funds would have disappeared.

    • 0
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      While you exclaim about Zambia’s $2.8bn Euro bond, Countries like Egypt, South Africa, Kenya speak about over $12bn worth of bonds. Nigeria has just applied for over $12bn simply to cover the wage bill. For Zambia the $2,8bn was for infrastructure development that spur development and in the end pay for itself. Guys let us not think small like this. The nation should take advantage of the financing available financing to develop this Country. Even the good roads you guys enjoy in South Africa, that Country is still repaying the debt as we speak.

    • +17
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      @1.5 Chama wape Tenga

      Do you have any idea how big the economies of Egypt, South Africa, Kenya, and Nigeria are? Secondly, do you know how those countries are using the money they borrow?

    • +5
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      Where in White Jesus’ s name is the Sink fund A/c Fossil Chikwanda was talking about…this is the selfsame I wanted a change in govt by anybody even Green Party as everything is being swept under the carpet as these empty tins will never admot theor failure.

  1. +11
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    How many times are we going to tell you that Mutati is clueless. That job needed a real economist not someone who was trained to count money secured by someone else. The only reason they are looking at re-financing is to get some change for other “projects”

    • +9
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      @ 2 peter njobvu

      Hold your fire. Mutati was not the one who borrowed that money. Someone else did. Mutati inherited a bankrupted treasury.

    • +6
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      Please don’t underestimate these “Bellyticians” like Mutati. You are making a very big mistake there.
      Intelligent they are, but all decisions they make are lacad with greedy dishonest intent – THE WISH TO EMBEZZLE!
      They are acutely aware in Zambia NOBODY goes to Prison & stays for Plunder embezzlement, from Kafupi, Shansonga, Chungu, Katele, R.B, Liato, Muteteka, Kapoko & now Kambwili
      Show me ONE who has ever paid for their Economic Sabotage sins. Even when convicted, they are quickly released by the Godfather of Corruption Chaiiman Chagwa of Chawama.
      WHAT ZAMBIA REALLY NEEDS IS WHAT HAPPENED IN LIBERIA WHEN DOE TOOK OVER LINED UP ALL CORRUPT EX- OFFICIALS ON THE BEACH, & SHOT THEM. That will serve as a deterrent, otherwise keep dreaming with your Corrupt A.C.C.

    • +4
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      @2.2 Keleni tasa atushe’

      With all due respect, you are trying to crucify Mutati for the sins of another. If he is a “Bellyticians”, as you have so insinuated, what Mutati has, as of now, is an empty plate.

    • +5
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      @2.2 Keleni tasa atushe’

      I am aware that there had been a feast. But that was before Mutati stepped into the room By the time he did, the people had already taken their deserts, washed their hands and disappeared. For Mutati, the only sighting he may have had, if at all any, were the left-over bones. What we are seeing him try to do now, is to convene another feast; one where he will preside.

    • +4
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      @Meimatungu. You are right on , mate. I’m neither PF nor MMD….not even UPND because I have never relied on politics for survival. Truth is Mutati is only trying to mop up the dirty. The real spoilers have already washed their hand and washed their mouths. If anything, Mutati should be given credit for having accepted the job in the first place. I cant imagine who among the current crop of PF ministers could do a better job.

    • +2
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      mutati is also liable for all these mistakes and he will later be answerable for them.He is actually a thief that’s why he joined pamafi party

  2. +2
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    Where is this same money? Me I just bought a 5 hectre Farm house & a AMG E400.I feel cheated coz the money being mentioned is too big

  3. +3
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    …you think they will listen or heed to that advice…??..their filth fingers are itching to receiving personal commissions…that what they are mainly interested in….
    …corrupt African politicians…!!!!!…we, the ordinary people(voters), started the same economic race with the politicians when this govt was formed in 2011…some politicians were only 2 to 3 kilometers away from us (economically better off)..they were visible with our naked eyes…but now they are about 200 to 300 kilometers away from us(better off)..they are not visible even with a binoculars or telescope…if they claim to be doing a good job for us, how come we are this far behind them….??…wake up people!!!!

  4. +1
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    Similarly, the fuel subsidy and electric power subsidy must be revisited. It is not enough dangle One Billion Kwacha as savings from fuel subsidies. There is need to make a technical present. Part One will tabulate the cost of implementation of infrastructure projects, including hospitals, clinics and other health related buildings and equipment. Include here road construction and maintenance as well as new public universities, airports and district and provincial offices and accommodation. Part II will tabulate the available resources fro infrastructure development in the country. Part III will tabulate revenue projections based on professional calculations. Affordable energy is an important ingredient for economic development.

  5. +4
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    For investors to agree terms of re-financing they would need assurances from the International Financial institutions that the Zambian economy will be managed well and the outstanding loans will be serviced and the total debt will be repaid. The Zambian govt would need to mobilize support for a Financial Programme led by IMF and supported by Donor Aid Agencies, Multi Lateral Agencies and Commercial Banks. Such support from the International Financial Community will only come if the illegitimate Edward govt puts its house in order. That means implementing reforms for economic growth, respect for the Zambian Constitution, Rule of Law and good governance. Observation of human rights is a Must and on this basis the UPND Petition in the Courts has got to be resolved amicably.

    • +1
      -1
      vote

      Resolving the UPND petition in the Courts you mean breaking the Constitution on the 14 days clause right?

  6. +2
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    While you exclaim about Zambia’s $2.8bn Euro bond, Countries like Egypt, South Africa, Kenya speak about over $12bn worth of bonds. Nigeria has just applied for over $12bn simply to cover the wage bill. For Zambia the $2,8bn was for infrastructure development that spur development and in the end pay for itself. Guys let us not think small like this. The nation should take advantage of the financing available financing to develop this Country. Even the good roads you guys enjoy in South Africa, that Country is still repaying the debt as we speak.

    • +5
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      @8 Chama wape Tenga

      Where is the infrastructure that you are talking about? Where is the development? PF simply pocketed the money and walked away; leaving the country with a huge mountain of debt to climb. Zambia’s economy is crippled, largely because of that mindless borrowing.

    • +5
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      @8 Chama wape Tenga

      The countries you are mentioning have, relatively, bigger economies and invest the money they borrow wisely. They grow their economies. Zambia’s economy is shrinking. It’s drying-up – the result of poor planning.

    • +6
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      @Chama wape Tenga

      I can’t put it more clearer than Meimatungu has done above. The countries you mention are mature in their approach and the way they utilise borrowed money. In contrast Zambia’s leadership just don’t have a plan. They seem to have a child like belief that once you invest money in roads, the country will automatically, without further effort be developed. This is their thinking. I think IMF and other financial houses are now realising that dealing with Zambia’s current leadership is like dealing with a bunch of kids who don’t know what to do with the money.

    • +4
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      thats the problem with lack of analysis. just because one family can afford to borrow so much because they have means of paying even you start borrowing excessively.

    • +4
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      These economies this id10t is mentioning has a buying capacity 10 times tham Zambia, thats a population ranging from 5 to 10 times the size of zambia.

      Their GDP are also almost 20 times than Zambia’s GDP.

      PF wants to steal in broad day light.

    • +5
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      Iwe’ Chama, Grow a Brain Please!!
      We are NOT against Development, but against wastage, Embezzlement, & trickery!
      Zambia has no medicines in our Death trap hospitals, hence the leadership go abroad to S.A. We have no proper Schools 50 years after Independence, construction of roads in Zambia is the most expensive on the planet, while citizens especially Women & Children go hungry, as Chagwa dressed the whole nation in chitenge featuring his corrupt head, & again we borrow more!
      Where do you think all the money has gone, while we grapple with weeks @ a time of power blackouts??
      Enough is enough! GROW A BRAIN PLEASE!!!

  7. +3
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    Back again in IMF’s backyard, the same place we got evicted not too many years ago. Back to playing poker against a robot, a game we are not known ever to have won. Do we learn?

  8. vote

    IMF is fully in support of RE-FINANCING, but its the timing that they are AGAINST!
    Re-financing occurs usually when a loan is approaching its ENDING and the borrowing sounds an alarm!
    In Zambia, we are only less than half way and we are already sounding the alarm…..sure, why this speed???
    “The Zambian government has relied on external financing(DEBT/LIABILITIES to create numbers) as its spending(EXPENDITURE) rose over the past few years while revenue(INCOME coming from numbers created from DEBT/LIABILITIES acquired) remained almost the same, which has put pressure on its exchange rate( INFLATION – weakening of the kwacha)”!
    Refinancing now will mean more increase in DEBT/LIABILITIES, EXPENDITURE, static INCOME and MORE INFLATION(widening the gap between the rich and the poor)…

  9. vote

    Why do I get the feeling this bonds underwriter might be someone’s friend no wander the rush to refinance. I think there should be stricter regulation on eurobond markets so sum pipo won’t kip borrowing anyhow. Coz I think it’s too porous.wats our current credit rating by either moody’s or S&P.anyone?

  10. vote

    The IMF’s advise is not only untruthful but a ploy to protect its peers earnings from height intrests we are currently subjected to. Replacing these expensive bonds for cheaper money can not only be encouraged but should be and must be done.Besides who doesn’t know that once we refinance then our balance of payments will be healthy and we won’t need IMF intervention. A matter IMF is aware of.It goes without saying guys….

  11. vote

    Good this will now teach them a lesson in finance management.
    Cancel useless trips abroad. Stop over spending.
    Kabobs is not good

    • vote

      @17 Bo

      Teach who? The only lesson thieves are interested to learn is how to steal smarter and not get caught, not finance management.

  12. +1
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    Why only talk $750 million Eurobond in 2012, followed by a $1 billion issue in 2014 and another worth $1.25 billion what of $550 issued by MMD which part of this money has gone into servicing bond

  13. vote

    The decision taken by IMF on refinancing of Zambian debt is loud and clear. This decision was arrived at after concern was raised with USA and other world bodies about the governance issue on Zambia and the just ended 2016 inconclusive elections. The issue of corruption in the nation was a factor whether IMF should bail out the Zambian economy to benefit corrupt leadership and not the citizenry. These factors determined IMF to deliver their decision for Zambia to fulfil the set conditions.
    If Zambian leadership does not address these issues, we (Zambians) will raise the alarm and prevent IMF to bail out Zambia. We have effective contacts to accomplish this edict. Be warned.

  14. +1
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    Bushe Lungu nabasula banakwe tababelenga ifilembwa pano mwaaa? People have brilliant ideas for our country, wonder why we end up with I.d.I.o.t.s in leadership positions.

Comments are closed.