LONDON, Nov 28 (Reuters) – Zambia expects to host a mission of the International Monetary Fund (IMF) before the end of the year and hopes to have a $1.3 billion loan deal in place in early 2018, Treasury Secretary Fredson Yamba said on Tuesday.
Speaking to Reuters on the sidelines of a mining conference, Yamba also said Africa’s No. 2 copper producer was on a mission to cut debt, and would consider additional borrowing to plug financing gaps only if terms were favourable.
“Come 2018, we must have a final (IMF) programme. It has taken a long time because the parameters have been changing,” Yamba said, adding the IMF wanted the government to provide more details on debt stock, creditors and servicing costs .
“Our debt has accelerated too much. They wanted us to come up with action plans,” he said.
Zambia and the IMF agreed in October to chart a new path towards debt sustainability after the IMF delayed the conclusion of talks, saying it was at high risk of debt distress. The finance minister said last year that almost 20 percent of gross domestic product was being spent on debt servicing.
Asked if a deal could be reached in early 2018, Yamba replied in the affirmative.
Part of Zambia’s debt problem stems from $2.8 billion in Eurobonds, issued from 2012 to 2015. Yamba said the government would “operationalise” a planned sinking fund next year, aiming to accumulate cash for repayments, but was also looking at refinancing.
This may include swapping existing bonds for longer-dated issues, Yamba said, detailing plans earlier outlined by finance minister Felix Mutati, but he added this would be done only if favourable terms are achieved.
He declined to say what yield level could be considered favourable.
“We need to see how we can refinance them … Looking at the (2022) $750 million bond is critical. It’s a bullet payment,” he said, referring to an issue whose entire face value is paid upon maturity.
He said a Chinese loan was a possible option but there were no discussions on that yet.
The IMF loan delays have triggered a slide in the kwacha currency to around 10 per dollar, the lowest level since January.
Yamba predicted the kwacha would stabilise, helped by stronger copper prices and rising exports. He described the current exchange rate as “comfortable”.
Inflation, seen at 6 percent this year, would likely fall under that level next year, he added.
Copper accounts for 70 percent of Zambia’s foreign exchange earnings and the country expects to up copper output to 740,000 tonnes this year, increasing to more than 750,000 tonnes in 2018, Michael Chibonga, acting director of the mining cadastre department at the mines ministry told Reuters.
Zambia is also emerging as a producer of cobalt, expected to be in strong demand for use in batteries for electric vehicles, and Chibonga said its output was expected to rise alongside increasing copper production, although he did not give figures for cobalt.
The government has based its 2018 budget on a $6,000 per tonne price, Yamba said, but added this could be revised upwards. Copper prices were quoted around $6815 on Tuesday.
Please Zambia don’t!
What else do PF know ?? It’s borrowing and stealing , full speed ahead….
People of Zambia, let the government account for the money they have borrowed so far.
If the West were responsible, they would insist on accountability, and transparency on how these loans and/or aid is spent. There is too much corruption in Zambia, and self importance.
Anyway, giving loans to Africa is supporting dictators like Jonathan coz they simply transfer that money straight into their bank accounts.
#nomoreloanstoAfrica
Consistently consistent here saying it, Zambia does not and should not contract IMF loans because these loans result in harm to any developing country economic. Look in economic crisis we’re going to spend more, increase our deficits to stimulate the economy. But the IMF will order us the exact opposite, to increase interest rates and cut spending resulting in our health care, education and social spending to choke adversely. Remember if interest rates are high, businesses can’t get credit as the case is today. If IMF is being engaged to deliver assistance in the form of debt relief and grants instead of loans, then we are cool with that. The insatiable appetite for loan contraction must stop now as they only lock us in economic stressed with zero equity.
Look at @Senior Citizen ^^ why can’t you call a spade a spade – its Lazy Lungu’s govt that is putting us in debt, its the one with the selfsame insatiable appetite to borrow.
@senior citizen
Can I hear constantly consistent praise of your clueless loan borrowing PF,,, please dance
Can I hear some clueless bootlicking PF disciples ejaculate praises on chagwa lungu
Sharon is disguised Kampamba Mulenga, how can she say Please zambia don’t?
1 Kota of the amount will spent on presidential traveling, 1 Kota on salaries, half will end up in Auditor General report.
A brain that thinks is what this government needs to borrow. Money, however much, puts us back into the same ditch, the same we have been falling into from time immemorial. We simply can’t learn. Can we?
Mnangagwa asks for CVs, application letters
Mnangagwa has requested that all former Zanu-PF ministers who want to be ministers in his Government should submit CVs, an application and a motivational letter stating why they want to be ministers and what they seek to achieve in a ministry of their choice.
This comes after Mnangagwa announced that he will merge ministries in order to remove duplication and to streamline government structures. He also said that he will appoint a leaner cabinet in order to reduce Government expenditure. The President also said that those whose ministries will be abolished will be seconded to other areas in the Public Service. President Mnangagwa also hinted at a youthful cabinet and said that those that have reached retirement age will be laid off. He…
He said that he will not tolerate slothfulness. I am currently in the process of putting together a new Government structure, which should essentially be leaner. This, of course, will entail the merging of some line Ministries in order to remove functional duplications as well as contain unnecessary expenditures, so as to enhance productivity and efficient delivery of service.
I want to assure you that no one will be laid off, except those who have reached retirement age. Those whose Ministerial posts will be abolished will be re-skilled and reassigned to other areas in the Public Service.
I don’t know about these tins getting an IMF handout in 2018 but at least Secretary to the Treasury Fredson Yamba sounds sincere unlike Sly Accountant Felix who would have put on his usual sales pitches!!
@Senior Citizen The bubble is just about to burst! Bamabala have been borrowing now the cant borrow anymore! And IMF doesn’t want to lend them the money! Felix is now looking at internal borrowing meaning recession! We want the best for Zambia but bamabala won’t listen!
IMF please don’t gI’ve us the money. At least not now
Really laughable…now its 2018…what happened to November? 2018 the financial year will be done by then…this begging mentality has to stop learn to only spend what you have and live within your means!!
Amazing knowing cadre mentality. Now i repeat: u mean the pf minions are crying for imf rescue, imf the stupid imperialists who, with hh, want regime change? Yes, pf is luck zambia has educated illiterates. Meanwhile this imf can lend money to this group of robbers as revealed, among others, by the financial intelligent centre? These robbers are blessed to have non politicians like hh in opposition.
Felix Mutati is taking us for a ride. We don’t need that loan.
What wrong you are no longer “sontapoling” always commissioning overpriced projects that behind schedule and over the budget…now there is no money in the pot merely scraping the bottom of the barrel!!
@kudos
Zambia doesn’t need that loan,, but your PF kaizer needs it for champagne and lungu needs it for the air bill,,, phwahahahahahaha!
@ 4.1 Jay Jay
The barrel has no bottom, apparently. It’s a bottomless pit.
Mr Kudos! you support everything PF. What are you suggesting! Dance hard dununa reverse.
That’s very bad.
How come others are making money out of our resources, and then lend us money; can’t we make the money ourselves?
These empty tins have no vision hence no policy…both the Vice and the President are all out of the country at the same time attending talk shops!!
A tiny bit of thinking is what we need. We would rather die than think.
For not thinking, we are sinking.
First IMF approval was expected january 2017, then went to june 2017, then october 2017,then november IMF team were in zambia now it will be concluded in 2018????
wishd ful thinking…
PF curb those foreign trips!
Always borrowing no investment.
What a disaster!
Am confused I thought FM said cabinet had decided not to borrow on non-concessional rates? What is this a concessional loan?
Fitch just gave us a B rating and negative outlook, and stated the fiscal deficit will widen to 7.5% of GDP. Favourable terms can only happen if you have a plan to reduce your debt, expenditure and can show a clear path. The government haven’t actually told the IMF the extent of the debt, so that $1.3bn will be on hold until 2018 if not further. In addition Mutati’s plan to raise revenue hasn’t gone to plan, as you still have an informal sector that isn’t subject to tax, plus this over dependence on Copper is helping no-one. It may have improved, however we don’t own the asset.