Bollomberg this week reported that President Edgar Lungu said Zambia whose Eurobonds are trading at distressed levels, is able to repay its debts and will soon emerge from an economic slump.
“Zambia is not in a position of a crisis,” President Lungu said in an interview in Maputo, Mozambique’s capital, on Wednesday.
“When you find that you are being strangled by debt, you hold back and see how you can realign your position so that in the end you continue being alive, you don’t suffocate. That’s where we are now.”
President Lungu’s government is trying to revive an economy that the International Monetary Fund says is growing at the slowest pace in more than two decades, after a slump in the price of copper, Zambia’s main export, over the past year.
A drought has also lowered water levels at hydro plants and caused power shortages.
Spreads on Zambia’s dollar bonds hit 2,000 basis points above U.S. Treasuries last month as investors fretted about its ability to pay off debts.
It’s the only country in the Bloomberg Barclays Emerging Markets USD Sovereign Bond Index, which includes 75 nations, whose securities have lost money in 2019.
President Lungu, who faces re-election in two years, said that while his administration had not frozen new loans, it would prioritize concessional borrowing that comes with lower interest rates.
“We have realized where we are and I think we have taken measures,” he said. “Those measures will see us get some breathing space so that the economy begins growing again. In a few years, we will see Zambia boomerang and rise again to that growth rate which is acceptable.”