International Media is reporting that investors have welcomed the firing of Former Finance Minister Margaret Mwanakatwe by pouring funds into the Zambia bonds as evidenced by the rise of the Zambia bonds on the International Market.
According to Reuters, Zambia’s dollar-denominated government bonds jumped on Monday after the President Lungu sacked Finance Minister Margaret Mwanakatwe and appointed central bank deputy governor Bwalya Ng’andu to replace her and Bloomberg also reported that the price of Zambia’s dollar bonds due in September 2022 rose 1.7%, the most since June 20, to 66.9 cents on the dollar, equating to a yield of 19.9%.
Bwalya Ng’andu was sworn in as Zambia’s new finance minister, a day after Margaret Mwanakatwe was fired from
the post. Ng’andu, 64, a former deputy governor of Zambia’s central bank, is the third person to hold the post in three years. He was sworn in at a ceremony at the presidency in the capital, Lusaka.
According to Bloomberg, Dr Ng’andu’s appointment comes as the government tries 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. A drought is causing power shortages and an escalating dispute with copper producers has not helped either.
Bloomberg news further stated that the incoming finance minister will need to soothe investor concerns that Zambia may default on its debts unless it gets a bailout from the IMF or negotiates easier terms on loans it obtained from China and that he’ll also have to rein in the government’s ballooning budget deficit, possibly with spending cuts. The shortfall in the first quarter was 4.8 billion Kwacha ($383 million), 12% higher than the Finance Ministry’s forecast. The ministry has a deficit target of 6.5% of gross domestic product this year, compared with 10% last year.
According to Bloomberg, Chibamba Kanyama, a Lusaka-based independent economist also welcomed the appointment of Dr Ngandu as the new Finance Minister.
“He comes from a banking setup, so he understands a lot more about the actual realities of the Zambian economy,” said
“He is not a politician and by virtue of him not being a politician, I am sure he will rein in colleagues. I am very sure that he will be able to succeed if he focuses on the fiscal macro economic stabilization and also and do away with sales tax.,” he added
And Barrick Gold Corp. Chief Executive Officer Mark Bristow told reporters in Lusaka on today that they are are very encouraged by the appointment of the new Finance Minister, who is a technocrat.
Meanwhile, the Economic Association of Zambia (EAZ) has welcomed the appointment of Dr Bwalya Ng’andu as Minister Finance.
EAZ president Lubinda Habazoka has experience in economic matters as he has served in various portfolios in Zambia and outside the country.
Dr. Haabazoka said the association will consult the new finance Minister widely on economic matters.
Meanwhile Bankers Association of Zambia (BAZ) president Leonard Mwanza said his association is hopeful the new minister of finance will address the fiscal challenges the country is facing.
Mr. Mwanza said there is need for the new minister to focus more on increasing revenue base to stimulate economic growth.
The two were speaking to ZNBC news in separate interviews in Lusaka today.