Monday, May 20, 2024

Zambia’s foreign reserves could fall to US$1 billion by June-Standard Bank


The Standard Bank Group which trades in Zambia as Stanbic Bank has forecast that foreign exchange reserves in Zambia could decline further to US$1 billion before the end of June.

And the Standard Bank Group says in order to raise the funding required to repay Eurobond maturities, presuming that refinancing is not an option, Zambia would easily sell some of its assets.

Bank Head of Africa Research Phumelele Mbiyo said the tentative forecast is based on discussions that the bank officials had with the Bank of Zambia during a recent visit to Lusaka.

In the report titled Déjà vu, the Bank says the amount of external debt service payments was sufficiently large to suggest that foreign exchange reserves could be closer to US$1.2bn or even US$1.1bn by the end of March.

“What was conspicuously lacking was a plan to quell this persistent drain. Of course, operationally the BOZ would buy Forex from the market in order to accumulate the Forex it requires to continue servicing external debt. We were left with the impression that policymakers are bemused by the market’s obsession with whether the government would seek an IMF-funded program,” the report read.

The report stated that it is clear that the government does not see the level of the fiscal deficit as an issue and neither has it ever seen it as a key lever with which it could arrest the deterioration of the Balance of Payment.

“Indeed, during our discussions with the Finance Ministry it was clear that the government is still keen to borrow as much as  is feasible, whether domestically or externally, in order to continue with the government infrastructure development program. However, during our meetings last month the Finance Ministry conceded that the persistent decline in Forex reserves, combined with mounting external debt service payments, raised the probability that a liquidity crisis might develop” it read.

The Bank said setting aside the fact that actual debt service payments in 2018 exceeded the budgeted number, it is worth pointing out that budgeted debt service payments in 2019 are nearly as much as the level of Forex reserves at the end of 2018.

“Having conceded the increasing likelihood of a liquidity crisis, the Ministry of Finance did not leave us with any confidence that anything is being done to avert such a crisis. Of course, there has been much reporting in the media that the government might be engaging Chinese lenders to restructure some of the loans that the government obtained from them. However, while acknowledging these media reports, representatives from the Finance Ministry could not confirm that anything of the sort is being worked upon. Neither did representatives at the Bank of Zambia,” it said.

The bank said over the past 4 weeks, they visited Zambia on a few occasions, meeting policymakers and some businesses.

“From the meetings we left with a rather strong conviction that a reacceleration of economic growth was unlikely to materialise in the next 2-3 years. Notably, in a lot of conversations with businesses, be it small enterprises or large corporations, the topic of government arrears kept coming up. Many businesses are clearly feeling the pinch as a result of working capital challenges that government arrears have brought about,” it said.

“This is either directly for those that are owed VAT refunds or indirectly for those supplying to small and medium enterprises that are themselves supplying to the government, and have not been paid. From a policy perspective, it seems as if there is a broad acknowledgement of the difficult BOP adjustment that the economy is going through. Strangely though, there is hardly any discussion of any policy measures being taken to end the erosion of external buffers,” it observed.

And the Bank says in order to raise the funding required to repay Eurobond maturities, presuming that refinancing is not an option, Zambia would easily sell some of its assets.

“As pointed out above, the government acknowledged the shocks that hit the economy between 2014 and 2016. In response, it crafted an economic program that it sincerely believes is addressing the consequences of that shock. Investors questioned the Finance Ministry on how it would fund the maturities of the Eurobonds, with the first maturity due in 2022. The Ministry pointed out that while a liquidity problem might develop, there would not be a solvency problem,” it said.

“The government has plenty of assets, including ownership stakes in mining companies, whose value far exceeds the value of its liabilities. In order to raise the funding required to repay Eurobond maturities, presuming that refinancing is not an option, it would easily sell some of its assets. This was the first time that we heard policymakers raising the possibility of asset sales to repay maturing debts” it observed.

The Bank also charged that the IMF program still looks highly unlikely in the near term.

“We have not been convinced that this was likely to materialise anytime soon. Following our trip, we are still not convinced that the government sees any economic problem that would be solved by an IMF-funded program. Clearly, given that the core objective of Zambia Plus was resource mobilisation and well targeted spending, an IMF-funded program is irrelevant. After all, the IMF would insist on the government addressing the imbalances that fiscal policy conduct has exacerbated.”


  1. Wake up and smell the roses bane. Individuals are amassing wealth. Our children will pay for this through sub-par education, sub-standard healthcare, lack of ownership to mention but a few. This is beyond partisan, even if this report is not entirely agreed with.

    • Well, many people have been warning of this scenario. But they have been labelled agents of the opposition and doomsday prophets. What do you have to say about this assessment from a commercial bank? They are also agents of the opposition?
      Guys, let’s play honest politics. I keep saying it, just because you are benefiting from the corruption and reckless PF spending should not blind you to the truth, nor should it harden your heart against your fellow citizens who are suffering and have no access to basics. And you defend a man who buys a luxury private jet when he already has one.

    • How can you support a leadership that displays so much greed, recklessness, stubbornness and callousness?
      A leadership that buys a scania for 1 million USD.
      A leadership that buys a luxury plane for one man when there is already one that is perfectly functional.
      A leadership that overprices road contracts in order to get kickbacks. 1.3billion USD for 316km?
      A leadership that has ministers with unexplained 6million USD and 17million kwacha. A man who was just a policeman?
      A leadership that buys ambulances for 300thousand USD? The list is endless. Meantime lecturers not paid. Council workers not paid. Postal workers not paid.
      But money flows like water at campaign events.

    • Seriously, I would like to understand how you can support people like that. When you go to hospitals and see the deplorable conditions, when you see that there are no essential drugs, when you see that mothers are needlessly dying while giving birth because they couldn’t access medical help, when you see our universities not being funded and our lecturers not paid, how can you support these people? Is it because you are a beneficiary to the plunder at the expense of the poor? Your conscience has been seared as with a hot iron? Am not saying support a particular opposition. But am saying stand for what is right and condemn what is evil. Speak for the voiceless, fight for the weak, stand for the oppressed. Don’t be so hard hearted just because you are not feeling the pinch or because you…

    • ECL is a waste of time and space in that seat of Presidency he could be doing more valuable things else where in smaller responsibilities that suit his limited and myopic capabilities ….the long term damage he has done to this country is inexcusable for any voter to wish him to stay on, if there was a way he should actually be leaving now.

    • LT should stop lying for the thieving PF. I have friends in Stanbic Bank who have told me that actually the foreign reserve has dropped to a mare $1million not billion. And government is trying hard to find money to buy forex to beef it up for debt servicing. This explains why salaries for many government departments have not been paid and will still not be paid for the next 2 to 3 months.

      Currently the PF has only paid gun carriers but come next month only certain units of the armed and police forces will be paid. Others will have to wait for the following month.

      PF ni Chimbwi chabe. They are just a bunch of thieves.

    • Not good, not good at all … we can’t roll like. If this true, we need to double down on raising cash from within and increase our exports potential in non-traditional goods.

      That’s where a national airline comes in too. What most people don’t know is that the Lusaka-London 4 times a week flight supported a huge export business directly to the UK in products like flowers, fresh fruits, tobacco, artifacts and jewelry just to mention a few.

      Those were huge foreign exchange earners thereby improving our current account and balance of payments at BoZ.

      Also, all airlines tickets are donominated in USD another catchment for foreign reserve growth. Let’s push through investment vehicles to help increase our reserves. In the meantime, I need an explanation from Margaret on what her…

    • For some of us who grew up in UNIP days, we know how the story of excessive debt ends: suffering, inflation, poor education, hunger, small salaries, unemployment etc.

      I feel sorry for youths who blindly sing & dance for Lungu & PF00Lish regime reverse the HIPC gains we achieved with reckless borrowing.
      Again after he leaves office, recovery will take decades of austerity measures.

    • Continued …

      In the meantime, I need an explanation from Margaret on what her mitigating measures are.

      Epo mpelele,


    • On air ticket sales, the Ministry of Transportation predicts that 1.9 million passengers would fly the first year on Zambia Airways.

      Averaging a round trip ticket to Europe and Asia you are talking a minimum of $1,675 per round trip on the low side.

      That alone would bring in a minimum of $3.1825 billion in the much needed foreign exchange. Now you see why even small countries cling to their national airlines!!

      An airline is a huge foreign exchange earner for the country it is domiciled in.

      Epo mpelele,


  2. Well, many people have been warning of this scenario. But they have been labelled agents of the opposition and doomsday prophets. What do you have to say about this assessment from a commercial bank? They are also agents of the opposition?
    Guys, let’s play honest politics. I keep saying it, just because you are benefiting from the corruption and reckless PF spending should not blind you to the truth, nor should it harden your heart against your fellow citizens who are suffering and have no access to basics. And you defend a man who buys a luxury private jet when he already has one.

  3. When dunderheads rule the country these are the inevitable results. Can the PF contributors here apart, from that mental patient UPND cadre, please come and explain government’s plan to halt the depletion of our reserves? Ba BR Mumba, roll here and explain please.

    • I think donors should cut funding this irresponsible government and it’useless citizens.Some of the people who support this government are on antiretroviral treatment, cut off the bloody funding,the cost of that new jet is probably 2 years supply of ARTs,cut it off for the niggers to start thinking, even if we loose some the nation will gain as some 1diots will start thinking…

  4. What is more painful is apart from a road here and a bridge there the bulk of the billions can’t be accounted for. And the presidency doesn’t think they owe us any explanation!
    As Jay says these are wasted yrs!

    • A ka road here, a ka bridge there, a ka sido blue solar chigayo there, and tuma tollgates that look liike an entrance to a cattle kraal, how can such simple activities bring a nation to halt, it’s not like the nation is engaged in massive space exploration programme, chivotevote manje tagwela mutobwa, eotwikwite eotwikwite, ba zambia nina mulefwaya ati nuyuwine tulefwaya, eotwikwite…. Nchenze kulila muntu wanga.

    • Because we have been so spoiled with Chinese money that they know you can never pay back that people seriously think one small aircraft is worth that amount.

    • Habaazoka should be punished,i would even support targeting him and creating an offence just to teach him a lesson…

    • What has Haabazoka done? He only suggested replacing VAT with sales tax. That is good for our country. Zambia will no longer pay VAT refunds to the mines who have abused vat refunds by simply stealing from the govt

  5. PFoools are all just useless a party of dander heads and kaponya`s, these people are so dull that they can`t even budget for anything. Their ka president is the most uselsss president in the world even Maduro is better than the drunk debarred moron who pees himself

  6. Lol ,Zambians got rid of economically competent MMD only to hire the most incompetent & economically illiterate administration.Forex reserves of $3.5bn down to $1bn and economic growth from 6% down to 3%.

    • Well, people need money to build mansions in Swaziland. As well as to maintain concubines there.

      So naturally, they have been dipping into foreign reserves, without shame.

      Enjoy the leaders you have elected.

  7. Where are the PF people pano? Zee zoona? You are that ashamed you cannot even pretend? You people are mentally ill like your president because there is no way in the world you can justify such blatant incompetence in running the affairs of a once promising economy you PHUCKERS!!

  8. The large political base of PF is among the illiterate people who dont understand any of the things being discussed here.It is on that strength that PF has been winning elections despite below par performance. Unless the opposition come up with an election slogan which will highlight the poor performance of PF and which will easily be understood by the electorates, PF is likely to pull a surprise even in 2021.

    • I always say i wish Sata was still alive to witness the expected colossal economic problems that his functional illiterate mind has resulted in, i feel his death enabled him to get the easy way out..For the ones now in power please continue with Lungu,we warned against reckless borrowing, expenditure and corruption you insisted that you were on the right path,i hope you continue with the great leader so that he completely finishes you off,that is what you deserve…

  9. Chimese has spilled the beans that he assisted Lungu to WIn elections in both 2015 and 2016. In other words Lungu is an impostor at State House. He is not the president of Zambia.
    No wonder he and his cohorts have no heart for the Zambian Citizens.
    The thieves have looted our treasury! They are reckless and heartless.

  10. With this very poor economic performance PF and Lungu would’ve been relieved of duties and CEO roles if Zambia was an American or British corporation doing poorly.Amazing how Zambia is now poorer than in 2011.

  11. Anything can happen under this regime. We won’t be surprised to learn that foreign reserves have been completely depleted. After enriching themselves from careless borrowing, now it is the poor Zambians who have to pay the price. During MMD money used to flow. People bought cars, businesses boomed. This government came and reversed all the gains

  12. Don’t even think about selling another and who is standard whatsoever to give this nonsense advise.

  13. Truth be told things are bad, perhaps we should ask our colleagues in PF the way forward otherwise even them there are vision-less apart from making unnecessary noise blinding everyone that there supreme leader (ECL) is in control otherwise nothing good has come out. Wasted years indeed wasted time…

  14. …really sad and laughable when the one man…richest man is worthy 100 times a country….we indeed Black and cursed for real…we don’t think…dunderheads….

  15. Mwabombeni batata ba Chagwa for opening the eyes of Zambians again! Zambians have their eyes closed for more than 60% of the hours of each day either sleeping or in prayer. Chagwa’s incompetence is a good thing. Zambians are tested and tried to with any harsh economic situation. Zambians are as resilient as

  16. PF was the worst thing to happen to zambia, we have cluesless komboni chaps without a vision. Zambia may perish. 2021, patali!

  17. With the current drought and no maize harvest this year, people will be sheeting water because of hunger. The kwacha will tumble to at least K20 per dollar, fuel to K19 per litre, and mealie-meal from the current K120 per bag to K250. Unfortunately, many Zambians, including many PF cadres, will not reach 2021 to vote because they will die before then from hunger, poverty and disease.

  18. Tu kolokombwa tu PF natuluba. You !d!ots have contributed to the destruction of my country. Things will not improve because there is no one in PF with a brain to come up with an economic turnaround plan. These f00ls are now targeting businesses asking for financial records as far back as 25 years and claiming statutory liabilities were underpaid in the nineties. That is how much sh!t we are in and we have motherphuckers here celebrating ka Lungu?? On what basis do you celebrate him baf!kala coz it is definitely not on his economic acumen. You should all be ashamed. You have knowingly killed this country because of your narrow mindedness and greed. A once vibrant nation reduced to a pile of cr@p in a space of less than ten years???

  19. Sh!t will soon hit the fan.
    My understanding is that this is a result of incompetence and lack of any planning by the PF thugs government.

  20. This is a poison pen article written by a mean, evil spirited gnome (cackling behind its little puffy hands underneath the rose bushes in your garden. Or was it written by a leprechaun (a type of fairy of the Aos Sí in Irish folklore)?

    This is just tittle-tattle. It’s written suggestively, full of ‘could be,’ and ‘we didn’t feel.’ Surely, the premise on which this article is written would be better put forward by Minister of Finance? This should be an announcement put out by BOZ itself since it’s the nation’s bank. This is what happens when African countries buy banking services from Western countries. They start to cause political trouble by rousing citizens against their govt. Is it too late to cance Barclays replacement?

    • BOZ issued a statement telling us the reserves were at $1.5 billion as late as last month you dull twat! Get your head out of Sunday Chanda’s a$$ and start reading statements produced by BOZ and other bodies. How is it possible that PF supporters can be this stup!d? In the face of facts you start attacking the messenger? !diocy. And that drunk Minister of Finance was recently outed for lying to Parliament. Did you hear about that? And that’s the person you want us to trust with giving us accurate info? Awe tata mulibapuba. Not an insult, just fact.

  21. This is not a PF or opposition problem. This is now a Zambian problem. Austerity measures need to be implemented immediately.

  22. What’s happening in Zambia is happening on a global scale. We could have made wiser choices in regards to debt and some of the projects we choose to undertake but the global economy is on its knees. Europe is shaken look at the yellow vest protesters in France, the Greek economy, ,Italy, Brexit, and the American economy. Zambian reserves have never been anything to be proud of because if we are honest with ourselves we are not a nation of savers, producers or even just a skilled people. We live in the moment ,spend it when we have it including time (lol like the time I’m wasting of this useless site) and blame the people in power for tomorrow’s problems (like we didn’t elect them) We have no sense of accountability as a nation hence why the incumbent are always the villains.

  23. What do you expect from a country obsessed of building Chinese malls.U expect the reserves to be above 1 billion when all these chinese traders are sweeping Zambian dollas.Zambia now is dumping site of manufacturing goods from china and south africa.Malls are not a good sign of development.Manufacturing companies are solution to the current problems we are facing.Alas the president doesn’t even think about having manufacturing can think properly when is surrounded by kampyonga katondo who bought scanias at 1million each.So sad to have young pipo in leadership to destroy the country due to greed.They don’t think about the children coz they think they’ll live forever.Africa twasebana

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