Thursday, April 18, 2024

Analyst sees Zambia default risk rising as IMF loan talks stall


Minister of National Development Planning Honourable Alexander Chiteme and Minister of Finance Honourable Margaret Mwanakatwe participating in the 16th Statutory Meeting of the Africa Group 1 Constituency at the IMF/World Bank 2018 Spring Meetings at World Bank Headquarters

An Africa analyst at Eurasia Group says negotiations with the IMF over a long-delayed $1.3 billion loan are unlikely to produce a deal before the end of the year.

Ty McCormick wrote in a client note this week that Zambia’s external debt is likely higher than the official $8.7 billion figure.

“A planned review of the situation has been delayed and the results may not be made public. The risk of default is low in 2018, but will increase substantially in 2019 and 2020 absent a concerted effort to cut spending” and an IMF program,” the note said.

“President Edgar Lungu’s cash-strapped government has resisted the IMF’s calls to rein in spending. Lungu will probably continue to borrow and spend in the lead up to the election” in 2021. Debt figures “will likely be revised upward after the Finance Ministry completes its debt sustainability analysis,” expected in June.

“Nonetheless, this is not a Mozambique-style ‘hidden debt’ situation;” rather a “breakdown” of the debt-tracking process as individual ministries and parastals secured project financing.”

“Rising copper prices will provide a small cushion in the short term, but the government remains highly vulnerable to external shocks such as a slump in commodity prices or a drought that dents hydropower production and in turn hurts the mining sector”

The Kwacha extended its decline to a four-month low against the dollar and its Eurobond yields soared as loan talks with the International Monetary Fund stalled amid concern the country is under-reporting its external debt.


    • If only we can come to a time when government is not run by politicians but by institutions themselves. This is the issue of having weak institutions, starting from police, judiciary, parliament, Boz, local govt etc. Imagine that minister at state house who laughs everytime, i forgot his name. Is that man really serious or it is just how he looks with a smile. Look at Lusambo, he makes descision above institutions

    • Is this analyst better than me?

      Does he have a PhD ?

      Does he live in Europe like me ?



    • That is the consequence of Edgar’s Ubomba mwibala, alila mwibala policy. He also appoints an incompetent drunk Margaret Mwnanakatwe as finance minister….we are headed for a total collapse..Kleptocracy and impotency are a catastrophic combination

    • – RB moved the functions of Ministry of Finance to State House. Now we have the likes of Kaizer Zulu, Edgar Lungu (who don’t even know the meaning of BOP, GDP or GNP) controlling the financial affairs of the country. Their motivation for loans is getting cuts/kick-backs, Range Rovers, blocks of flats, Rolex watches, casinos etc.
      – Sata’s hiring Alex Chikwanda was a curse to our country. Then his over-ambitious roads project without any funds led to uncontrolled borrowing especially from Chinese. Then he moved RDA to State House further worsening control of borrowing & corruption. When RDA chairman Willie Nsanda died, billions of cash/forex was found in his home, in the ceiling, in sausage bags etc.
      – The allowing of individual ministries and parastatals to get loans without treasury…

    • CONT’D….
      – The allowing of individual ministries and parastatals to get loans without treasury approval or tenders going through Tender Board (ZPPA) led to rampant uncontrolled borrowing & corruption.
      – 2 elections in 2 years forced PF regime to borrow excessively to hoodwink dull voters with white elephant projects.
      Countries with good responsible governments send their Finance Ministers on roadshows around the world to woo investors, but our LAZY PF Regime sends delegations to lending institutions (IMF, Eurobond, World Bank)to source loans. Tighten your seat belts my fellow countrymen. The ghost we’ve been warning you about in the last 5 years has arrived. Zimbabwe is coming to Zambia.

    • Talks about getting a new loan to payback another loan, how stupid can one be??
      If you can’t see dullness in this PF you are beyond ….

    • Sontapo epo wabombele …. “Zambia’s external debt is likely higher than the official $8.7 billion figure.”

    • You must be a fool to blame HH for pf’s incompetence. Did Mwanawasa borrow this much and did HH sell those public asset without the approval of the then chief in command? If HH store he surely did not steal alone because the selling of the so-called assets was a decision made by a committee and not an individual person.

    • hahahaha, Kudos spent the whole afternoon liking his own comment. You got exhausted pali 36? Do two more so that it doesn’t look suspicious

    • You must be too young Kudos to compare the current situation and when government ran the economy It was bad my friend really bad, no very bad, Zambians are not suffering now, there was suffering then my friend!…did Zambia decide to privatise or was told to do so by those who had money to lend her. The current situation will even be difficult because there is nothing more to sale!


    • shu shu

      Hehehehe so now PF is HH ? You rats are funny ……..sata who ousted RB now becomes HH ..

    • @ Enka
      – RB through his sons started looting the $3 Billion reserves Mwanawasa left. Both sons were charged, 1 son was convicted, 1 son fled to RSA.
      – RB brought in Chinese who are the core of indebting our country & corrupting Lungu & PF00Ls through kick-backs for contracts & awarding tenders to foreigners so that the money trail can’t be traced.

    • @Maloza those are lies RB was never found guilty and today he’s a free man bcuz it was a politically instigated prosecution.Even South Africa refused to hand over RB’s son cuz of lack of evidence.

    • Only a blind demented fooooool would assist these clowns ….I mean these guys they are going to beg from is where they bought those selfsame $70K Ambulances for close to $300K..its laughable

  1. It is utter stupidity and *****ic for anyone economically ignorant and historically blind to waste the enlightened citizens’ precious time reading diarrheal comment like the first one here. Ignorance is never an excuse even to be displayed like chaff on the mountain. Stupid *****.

  2. “…Lungu will probably continue to borrow and spend in the lead up to the election in 2021 ”

    Since lungu has no plan for jobs ….If lungu does not borrow he needs to raise more taxes until they dance dunnuna in straight lines or he will go to jail….its a simple choice.

    • Unfortunately, we have a breed of people suffering from “poverty of ambition” and thinks current status is idea and suites them. therefore they will still dance to version 2 of dununa reverse.

  3. Scary economic outlook. We need prayer and ancestral intervention. No amount of physical effort will enable us repay the loans. Reverend Sumaili to guide the nation in prayer and fasting here. Chiefs should join in and petition our ancestors on this issue.

    • Prayers? Ancestral intervention? God is not gullible. We reap what we sow – that is the bottom line.

  4. Lets declare the Eurobonds force majeure. We can argue that this is an act of God and no one saw it coming. No one saw the loans ballooning. That yes we have been irresponsible, but we are humans and subject to error. We beg that all the loans be written off and we start on a new chapter. We are sorry but this will not happen again!!!

    • When Sata was creating districts and dishing out road projects like sweets you did not stop him. Ynceou thought MMD was St-uipd by sticking to the development plans. Zambians only have themselves to blame because PF’S campaign lacked substance I dont know how even a grade 12 could have fallen for it

  5. PF and lungu in particular have presided over a period of unpresidented access to funds…..borrowed and high copper prices.
    There is no GRZ or presided who have had access to so much money for development…..they should now be riding the wave of development. Considering the amounts spent lungu should not even need to campain in 2021…..but alas we find our selves with a begging bowel kneeling before the IMF……and now everything depends on IMF , weather conditions and commodity prices or the boat sinks……

    Very sad situation situation…all this because GRZ used the borrowed monies to build roads so the masses of unemployed youth could be loitering nicely on those roads and we were told investors will come flooding in…..

    Instead of banning the import of things like solar…

  6. Cont..

    Instead of banning the import of things like solar panels and open assembly plants in Zambia….banning import of bottles and open kapriri glass , banning import of all GRZ uniforms and have them made in Zambia…just with that effort …..the wider effects to the economy would have been significant but pf are too lazy and were all out looking for road tenders

  7. its tragedy,about the way we do things mwandi.I believe we need to improve on internal controls,more accountability and transparence from our leaders.Please strengthen instititution teeth like for the ACC and DEC.Then the separation of powers for the three arms of the government………………….

  8. I am a Tax-payer in UK, and part of my tax goes to fund IMF. I am glad to note that my money is well guarded by IMF against reckless th!eving Govts like Zambia’s PF Govt.
    As Zambians, the sooner we learn to live within OUR means, and increase our means, the better. We simply cannot go on like this. And we blame Trump for being blunt and calling Countries like ours ‘Sh!thole’ Countries?

    • The problem has been created by those who have wickedly decided to hold our democracy hostage by rigging elections, and upon getting to State House, discover to their dismay, that good governance is not about rigging. Their heads empty, I reckon their lips must now dry.

  9. Some comments as though Zambia is confirmed on the knees and dead At least when commenting on Zambia’s economy and risks posed by the budget Financing measures and debt ,at least you should not make it as though It’s a foregone conclusion. The minister and People running the government and Zambian Financial system should stop working ,simply watch and do nothing Running the country’s Finances is Balancing act never balanced but life has to continue until its better than worse. If some of you were in Greece as Finance Ministers, you could have chickened out already and confirmed many citizens to worse off situation than can be restructured and corrected like the Minister…

    • Jonathan, we happen to have dug ourselves back into the same ditch we got pulled out of a few decades ago. Contrary to your optimistic assertion, we are actually in limbo, soon to be ushered into hell.

  10. of Finance Hon Margarete Mwanakatwe is doing ,controlling expenditure whilst prioritising and Investing using debt and equity in those GDP GROWTH AREAS to actualise the Zambian Revenue Potentials and real options presented
    Margarete Mwanakatwe canot simply sit down she has to work the budget and see the country grow its GDP to levels to put more CASH revenues in ZRA to support the much refereed to OECD debt to GDP sustainable levels of 30% Mind you it’s not cast in the stone If you have capacity to collect more than 30% of your revenues you can leverage
    What should worry you most is the link between the growth in public debt and economic growth especially as seen…

  11. together with pear countries in the sub-Sahara region since the HIPIC and Financial crisis days Zambian has Invested well and performed well and surely that Gives it the More solid ground for our beloved IMF to see
    Look because Zambia is a Country with real Options and Potential, we cannot go through the financial crisis that has been seen in Greece due to public debt- or sovereign risk exposures or default on bond payments or find difficulties in restructuring the debt There is low volatility in our financial markets ,credit spreads are within basis points for non-toxic assets .Recently there have been upgrades ratings approvals because of the real options Investors…

  12. have seen and the Budget Measures and Plans to restore Sustainability
    Please understand also that It’s not always that a Country’s growing debt would always cause or trigger an eminent sovereign default The default must be seen beyond the norm. What people should be surely concerned with is the growth of the Zambian economy in the long-term to support the countries solvency y Investing those monies in sectors that will grow the economy
    Then when referring to or talking about the debt amount and thresholds ,Zambia is country run by Professionals they cannot map the country and run it at 90% debt benchmark levels without taking measures that they are taking austerity…

  13. measures in cutting expenditure and control emphasising revenue mobilisation , when the mean Debt to GDP for fairer country is at 37% Vulnerability in debt sustainability cannot be simply be assessed by assigning a mere theoretical threshold What the IMF is asking is the structure, the term structure and composition of Zambia’s debt so that they Give the cover of $1.3 Billion
    It’s also true that most countries even in the US Public Debt has always been speculative and not Correctly Known to the Last penny as in Public and Private Debt but Government and Operations and Financing has to continue

    • Jonathan, on a lighter note, you seem to have been running away from summary lessons. You have written a lot but pretty much the same thing.
      The position is that we are in trouble here. We are more concerned about the Eurobond and when its due for repayment. If we are looking for $1.3Bn now and we have to pay back lots of money by 2022, what does that tell you? We are in trouble mwana. Sata caused us the trouble and unfortunately he is late. Lungu is trying to follow Sata’s footsteps. More districts, problems

    • Jonathan is a propagandist, fully employed and paid for writing what he writes, by the PF government.

    • Dear Jonathan,
      That’s a lot of verbiage that amount to nothing w.r.t. the subject.
      You will do well to remember this:- “If you cannot explain it simply, you do NOT understand it well enough” – Albert Einstein.

  14. The point is at whatever level of Financing Gov must Continue People here must not show or paint a gloomy side Our Minister of Finance, Hon Margaret Mwanakatwe has come to terms and is accepting the adjustment Gov and Zambia is bigger than its Debt. than She accepts she needs to take stock of the debt and systematically tackle it down the road without engaging in fiscal brinkmanship if she will have to satisfy every comment here
    Then there are various funding methods at the disposal of Gov should that come to the fall Hon Mwanakatwe has and enjoys strong access to financial markets at fairly competitive low interest rates but her priority as seen…

  15. in her comments and briefs in the press is ZRA and Revenue mobilisation

    I like Ian the owner of Eurasia and the Analyst mentioned very thoughtful analyst you should note his wording though. They have not said it’s a confirmed default or GLOOM He has given a commentary for people to review re-balance and adjust
    It’s not a conclusion and Gov has laid the Ground work for careful adjustments and repayment

    • The problem is we are left vaunrable to weather and commodity price conditions….no matter what austerity measures they come up with , fact remains 70% to 80 % of the borrowed monies were spent on projects that do not immediately contribute to the GDP….very few long term real jobs and export options have been created , infact not enough to cover Zambia.
      As such it not too late to start massive import substitutions with locally produced goods to cut imports and create local jobs.
      It makes no sense to export raw copper only to import phone chargers made with the same copper.
      There is insatiable demand for solar panels….an assembly plant using Zambian copper. And for GRZ to think foreigners will come and do that for them is dellussional…… GRZ needs to take the lead here and…

  16. @Mr.kudos for your attention, BREAKING NEWS!!! HH Is Zambia’s Richest Man Ever ,networth Over $5 Billion
    May 8, 2018 647 25
    According to a l2018/2019 Forbes list released HH could be the second richest man in Africa if all his assets and money are declared….the story goes on to list his achievement. You haters can call him names or deform his character only fools will buy the falsehood that an outsider would have power to privatise government assets. Worse times are not far when you will start eating your tribalism…

  17. Libby. It’s your wishful thinking my dear. Things have gone berserk & we have people who are thinking on low level lines that PF for life. You are entitled to that level of your opinion. In simple terms it’s like when you running a house as a father then you over borrow exceeding what comes in as an income in what ever form, how do you hope to sustain your living taking in consideration that you must eat to survive, schools are not free, you need at least 3 – 400 kwacha of electrical units to take you to another month…etc. So this is where this country is headed to, a father who has over borrowed exceeding the income. Deal with it.

  18. Look China Has a Sovereign fund from its engagements with trades with others Similarly other developing developed and emerging economies and frontier also have realized that the only way to sustain the economies and the parities(Unfavorable Currencies/Rates/deficits) is to structure and price a sovereign wealthy fund You may call it sinking fund or other These countries have used the funds for sustainability and often have made concessional loans to us with similar endowed commodities Pricing a SWF into commodities for future sustenance takes overnight a decision and both private and public with vested interest often support and contribute per cent of a tonne its…

  19. its done everywhere and separate from taxes and often interaction with reserve system from Nigeria to Brasil Peru china Norway Qatar its the only way to be self sustained With Volumes of Copper ,you can reserve $2 Billion in in no time You have somehow allowed others to do this on your copper and lend you Bonds

    Every better performing country has a SWF

  20. PF take offence when one points a finger at them. But who then should we blame for wrecking our economy? Long after their tenure would have ended, we will still be cleaning up the mess they created. And yet even now, they prefer we give them accolades for a job well done. How ironic.

  21. Ecl clearly said I have no plan for the country.whoz to blame,atleast his got mwanakatwe and his bunch of ministers as a plan.

    • Sell what, Chinese and Indian left overs ?
      You are wet dreaming of HH hagain ?
      Hell the chinese are even driving GRZ cars .

  22. But really we have to borrow more to cover our debt…we should just borrow for the right reasons, for development not for elections, that’s about it.

  23. Adding salt to injury, PF wants to be issued a certificate of accomplishment, for destroying our economy. It’s those they are talking to, such as the IMF and World Bank, with whom they are negotiating for more money in their pockets, who are raising the alarm, telling us that all is not well. Extensive damage has been done. That’s how much trouble we now find ourselves in. And yet PF would rather lull us into deeper sleep, as once sang my ancestors: “Kuhu kuhu lobala kapili, babangw’i ba lobezi.”

  24. Come 2021 the rate will be K50 to one US dollar and PF in all their wisdom will be celebrating the fact that all our stolen dollars stashed in overseas banks are now worth five times more than what we found. That is their aim and that is what they will be boasting about while the majority of zambians won’t even see what a dollar looks like.

  25. Sometimes we need to see what others are trying to do They understand since HIPC levels that the main drivers of public debt to GDP has been rising fiscal deficits and exchange rate depreciation especially for US who mine and export and are commodity depended on the one single sole commodity Copper Our not sufficiently diversified economy is therefore also a source of major contribution to the debt levels Had we had a well divested portfolio of Revenues across sectors the scenario could have been a little cushioned during the commodity fallout
    Because of the need for stress testing Gov has focused on debt sustainable as it Invests those cash flows…

  26. in growth areas for Long-term sustenance to avoid further debt contraction It has down a risk profile and made it clear to weigh the costs and benefits of Financing amongst others Bilateral if you follow pronouncements reducing on market based external credit lines
    What we need for long-term is a diversified and robust economy with all global Investors present for long term sustenance increasing the revenues and at the same time reducing the exposures to negative exchange rate movements and refinancing risks we are seeing on the Minister table
    If you know how the exchange rate moves and the global regional economics prospects to 2030 ,if Zambia manages…

  27. its current debt conundrum the KWACHA will be a better currency than now trading below Its mean Value It calls for work and positive sentiments

    Then employment is either cyclical structural or frictional We still have a lot to do in there as the economy moves along the lines Most of it is purely structural

  28. Ba Like Times, report about the matter in Kabwe Highcourt in which a man has sued PF for misleading the masses with lies

  29. Another dancing day for upnd cadres!! I dont envy them, they need a bit of dancing if only to drown their sorrows over their fuc.kups with Chamene.
    Which brings me to the question: no upnd official, cadre or even h.h himself is telling us what they can do for their country. At the beginning of h.h in 2006 at least he was touted as “economic manager” or “economic messiah”, but no more in recent years. Maybe they have seen the fuc.kups that h.h has embarrassed himself with over the past few years. Understandable, who in his right senses would promote h.h as our saviour when he can’t even make a correct nomination for a simple by election? Or even a correct nomination for a running mate? Was he serious to pick GBM and expect votes to start raining all the way to state house? But then…

  30. Nonetheless, this is not a Mozambique-style ‘hidden debt’ situation;” rather a “breakdown” of the debt-tracking process as individual ministries and parastals secured project financing.”

  31. Sub-Saharan African nations are at growing risk of debt distress because of heavy borrowing and gaping deficits, despite an overall uptick in economic growth, the International Monetary Fund said on Tuesday.

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