The Standard Bank Group which trades in Zambia as Stanbic Bank has welcomed the appointment of Bwalya Ng’andu has Finance Minister.

The bank has however cautioned that Dr. Ng’andu’s appointment could be a case of having a different messenger delivering the same message.

In its latest report on Zambia, Standard Bank says Dr Ng’andu’s appointment as is a positive development that the market will probably look favourably upon.

“This is the third Finance Minister in three years. Obviously the country is facing some fiscal challenges that require rather drastic fiscal consolidation efforts. Perhaps there is also a need to restructure some external debt in order to lengthen the maturity profile thereof,” the report said.

“As we have repeatedly argued, there is a significant increase in the amount of external debt that is maturing this year, thereby increasing the government’s external debt service payments. This year the amount of external debt service payments will be nearly as much as, if not more than, the amount of FX reserves at the end of 2018.”

It states that the Finance Ministry expects external debt service payments to be in excess of 1.5 billion dollars per year over the next 2 years.

“Gross FX reserves are already lower than this, having consistently declined since about June 2017 when they were USD2.39bn. Is the change of Finance Minister going to change the advice that the President and the rest of the Cabinet has been receiving from the Finance Ministry?”

It added, “Judging from our conversations with the Finance Ministry over the past 3 years, it seems reasonable to believe that the Finance Ministry has been making calls for fiscal consolidation.”

“We might not know for sure what the new Finance Minister will be communicating to the President and the rest of the Cabinet. But judging from the increasingly strident warnings that the Bank of Zambia’s Monetary Policy Committee has been making regarding the risks to macroeconomic stability posed by fiscal policy, it seems reasonable to believe that he would continue to communicate that message.”

“Furthermore, taking account of the very strong possibility that the senior leadership of the Finance Ministry, besides perhaps the Finance Minister, is not going to change, then the advice that the Finance Ministry will deliver to the President and the Cabinet regarding fiscal matters is probably not going to change. Media reports indicate that the new Finance Minister wants to restart talks with the IMF.”

It says, “Recall that previous talks for a funded program ended in 2017 with the IMF bemoaning the risks posed by the fast pace at which external debt was rising. Additionally, the IMF advised the government to strengthen debt management capacity, improve the project appraisal and selection process and slow down the pace at which it was contracting new external debt, especially non-concessional debt.”

It added, “So, if these new proposed talks are to explore a funded program, then is there really a strong likelihood that the IMF is going to have a better assessment now?”

“Presumably, the President and the new Finance Minister conferred on the state of government finances, fiscal policy management challenges and the Minister’s proposed strategy to deal with them. If so, then this appointment would probably also be an implicit acknowledgement by the President that he broadly agrees about the need for fiscal consolidation.”

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15 COMMENTS

  1. How else will they steal if there are no Chinese funded contracts and the related loans. Unless we are lucky they have stolen enough and the seemingly insatiable appetite for corruption and kickbacks from Chinese contracts has been fulfilled. Otherwise, it will be business as usual. All that these loans provide is a trough for the pigs to shamelessly feed from.

    Our children will pay for the greed and wanton corruption. Cry mother Zambia.

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    • One thing is for sure. Lungu and his groupies will carry on stealing and abusing office.

      Just a few days ago, he announced austerity measures. Fast forward a few hours, the thief is globe trotting.

      The amount that has been stolen, one would think we have a dictator that acts without being challenged.

      Euro bonds can not be accounted for. Inflated contracts, as well printing excess kwacha to buy up Dollars and laundering in real estate.

      I swear these PF thieves think they will take this money with them when they die.

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    • In others words crank up the borrowing gears, pull out the begging bowels. The new Minister’s first statement was to pursue loan with IMF. Same circus, different clowns

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    • This Stanbic report was written by Zambians. How I wish even bloggers here were commenting economic issues at the same level as this report

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    • What they are saying is exactly what HH said. PF cadres unfortunately can only understand if someone else says it. Bwafya

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  2. What a beautiful line of thought.

    In fact Minister of finance should never be politicised.

    Thats the kind of analytically message we expect from GEARS and his president. Explain in detail

    Not telling explain to us that he is an illegal Minister of Finance

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  3. I dont believe that the govt does not know what to do but they just dont want to do the right thing. Different people as individuals and organisations have deliberated on the challenges with our economy and have gone farther to give expert advise on how to meander and eventually come out of the valley but the Govt have refused to listen for reasons best known to themselves. Macroeconomic stability is dependant on sound fiscal policy. Without that, you are fishing in a dry pond. A Finance Minister is just a figure head.

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  4. Maggie’s macroeconomic objectives her 2019 budget article 42 were as follow:
    I.Attain annual GDP growth rate of at least 4 percent.
    II. Sustain inflation in the range of 6 to 8 percent.
    III.Raise international reserves to at least 3 months of import cover.
    IV. Increase domestic revenue to no less than 18 percent of GDP.
    V.Reduce the fiscal deficit to 6.5 percent of GDP
    VI. Prioritize the dismantling of arears and curtail accumulation.
    VII. Reduce the pace of debt accumulation and ensure sustainability.

    From the Stanbic report,it is clear Maggie did not stick to her budget objectives and this could be explained by her perpetual postponement of the Sales tax leaving the mine owners have last laugh.Tragic!

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  5. hahahahahah… Sunday Chanda.. can you please comment on this report.. what is the difference with what HH said… Ya we need someone that will stand not a s acadre but a professional person. Three weeks ago Dr Ngandu was in the States. He met with IMF. DId the recommendation to fire Mulega come via the line? ndeipusha…

    beautiful article and the same things that made a firing on Mutati will visit Ngandu.. watch the space.

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  6. Stanbic Bank can leave if they want other banks and players will take over they have no right to tell the majority Zambians who should be President of Zambia..Let them take that nosense to where they came from that is using President Trumps language infact he was right….

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    • Is that why you left the States…? Kanshi bali kuchita deport…..lol
      Only for laughs.

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  7. Trouble with Mutaware is he is using Technocrates like magic wands! As long as he continues to overrule professionals on fiscal issues, the appointment of Dr Bwalya Ngandu will be another missed opportunity!
    Ngandu Magande succeeded because he enjoyed professional space! LPM was following Magande’s script! It remains to be seen if Mutaware Chagwa can do the same or better! We want him to succeed but his biggest weakness is he is a poor listener! He needs to do an overhaul of his cabinet and his set of advisors! Chipampe has already proved to be a professional press aid!

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    • I have never met a visionless person to be a good listener. Does ECL has vision, what’s wrong with zambians the man said I dont have vision.

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  8. WHAT IS THE AIM OF THIS REPORT , WHY MENTION 3 MINISTERS OF FINANCE IN A ROW, IS IT GOOD OR BAD THE FOURTH ONE WILL BE MAGANDE SEE WHAT U SAY ATASE

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