Investors consider Zambia as a safe haven, Bank Governor

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Bank of Zambia Governor Denny Kalyalya
Bank of Zambia Governor Denny Kalyalya
THE Bank of Zambia (BoZ) says the over-subscription o f Government securities is an indication that investors consider Zambia as a safe haven.

The central bank has also allayed fears by some sectors that the country will default the Eurobonds when they mature in 2022, 2024 and 2027 as Government has been up to date with payment of interest.

BoZ governor Denny Kalyalya said in an interview recently that Government bonds and treasury bills have continued to attract investors, with the development impacting positively on economic indicators such as the exchange rate.

On June 30 and July 6, 2017, the bonds and treasury bills were auctioned with Government bonds receiving bids amounting to K2.1 billion against an offer of K1 billion.

“We had a bond rate which was over-subscribed and the yield rates have come down, which is a good sign.

“Now, we do not have Government papers above 20 percent.That is important because it means that if Government borrowing is at a cheaper level, it will spread to other sectors,” he said.

Dr Kalyalya said the participation on the market by investors will bring in foreign exchange, which will make the local unit gain value.

On the repayment of the Eurobonds, Dr Kalyalya said the country will fulfil its obligations.

“We are taking measures to ensure that we do not default. Right now, we are paying interest on the loans. We pay twice per year for the three bonds and the total annual payment is about US$237 million,” he said.

He said Government may consider refinancing the bonds, which is one measure of managing debt.

“Debt refinancing is one possibility. A country can substitute expensive debt with cheaper one, so, if the economic conditions continue to improve, it means we could refinance the debt at a cheaper cost,” he said.

11 COMMENTS

  1. +2
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    Why is upnd officials and sympathisers on a mission of discrediting there own country. Of who’s benefits are they doing it for anyway.

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      Oval Head continue believing these theories, they are only good on paper and the reality out there is different. We are in reverse gear right now, call and ask your relatives in Zambia and they will tell you how tough it is. Prices are going up and electricity will soon go up

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      @HH OVAL HEAD,
      Bitterness, jealous and anger are cancerous to oneself. They are toxic concoctions to the soul, body, mind and character. They know theirs of wrecking Zambia is doomed cause DoA before the courts of public opinion. Besides it, a sense of entitlement has summarily killed their dream. Its a crusade without a national cause like a philosopher without a philosophy.

      They are fellow Zambians so we can only wish them well with a Damascus experience of Saul. Regardless, Zambia is in safe hands and on course for Greatness. With a poor debt ratio, the country has lost some leverage we need. The reason we should continue to share our experience in arresting the situation for a turn around and help put the country on a growth trajectory instead.

  2. +1
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    Zambia would have benefited more from these loans if only they were used diligently such as constructing our roads at a cost US$650,000 per km instead of US$1,500,000 per km!

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    Refinancing should not be considered as an option some 5 years out from maturity. Without refinamcing can the governor detail what is in place to repay the bonds. These are one off repayments not by instalments.
    Long on words short on detail

  4. vote

    Socrates you are correct but i wonder why we invested so much in road infrastructure when it is really non productive investment…… why not invest in milungushi textile mills using our money using our cotton using our people.
    Hemp , the male variety without the drug component is another agricultural pursuit than can have value adding by making thread, fabric, rope and the by product used in building. We have it all but dont prioritize. How have all the roads helped the economjc plight of the 78% of zambians ,iving in abject poverty

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    True. Zambia is the best investment destination on account of it’s abundant natural resources and weak legislation and sloppy regulations. Investors are sure to make a fortune in Zambia. No doubt about that. As long as we don’t believe in ourselves as citizens, nothing will work for us. Zambia is such a porous country where you can fly in, get a few goodies and fly out without any problems. Zambia is the raw material for the development of other countries!

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    If what Governor of BOZ is saying is true so why has Flexi Mutati the Minister of Finance been desperate to borrow $1.6 billion from IMF? The govt wanted to borrow this money from the IMF to finance the Balance of Payments,National Budget and re-financing the Eurobonds. Now that it is obvious that IMF Money will not be availed to Zambia due to various toxic issue what will happen? No IMF Loan, No Donor Aid and Western Investments to Zambia is simply a Recipe for disaster for Zambia. Mutati and Kalyalya know that the impending collapse but just like an Ostrich they are burying their Heads in the Sand and in shame. Time will tell!!

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      The Minister of Finance wanted pehaps ukulyamo… Now the Bank Governor has properly advised the President and not Mr Mutati who likes talking too much like bashi Nono…So everything is fine now…

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    Dr Kalyalya said the participation on the market by investors will bring in foreign exchange, which will make the local unit gain value.

    This guy is so desperate to show that whatever he is doing is really working. The gain is just for while and superficial. Provide long term solutions. Also,he seems to take pride in paying interests on these debts. He goes ” Right now, we are paying interest on the loans. We pay twice per year for the three bonds and the total annual payment is about US$237 million,” You cannot be paying $237 million in interest only. He is even proud and not ashamed servicing loans that are always stolen and nil benefit to the people.

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