Saturday, June 15, 2024

Zambia May Have Borrowed Too Much to Tap IMF Coronavirus Funds

Share

Zambia’s request for emergency coronavirus funding from the International Monetary Fund may be scuppered because of the southern African nation’s growing debt burden.

The Washington-based lender last year cautioned that the nation’s borrowing was on an unsustainable path.

And now, even as the fund makes as much as $100 billion available to member countries, the IMF warned it won’t lend money to governments if it’s not sure it will be repaid.

“In cases where the debt is unsustainable, the member must take steps to restore debt sustainability in order to access fund financing,” the IMF said in response to questions about whether Zambia’s levels of borrowing could hinder its access.

“This could require the government to strike a balance of fiscal adjustment that protects critical social spending and debt relief.”

The global economic crisis the pandemic has caused is exacerbating existing economic risks in Africa’s second-biggest copper producer.

Foreign-exchange reserves were at a record low in January, already below levels to cover external debt servicing this year. Government debt will reach 110% of gross domestic product in 2020, and the economy will shrink by 3.5%, according to the IMF.

Zambia has already started the process to hire financial advisers for a liability-management exercise of its foreign debt, which rose to $11.2 billion by December from $4.8 billion five years earlier.

The government is shortlisting bidders after it issued a tender in March.

Talks with the IMF over an emergency loan are ongoing, Chileshe Kandeta, a spokesman for the finance ministry, said by text message in response to questions about the emergency virus funds.

Strained Relations

The nation’s Eurobonds have plunged this year on concerns about the ability to repay the debt, with yields on securities due in 2024 more than doubling this year to 41%.

Zambia could qualify for as much as $1.3 billion in relief to deal with the economic fallout of the coronavirus outbreak that has infected 441 people and closed borders with neighbors.

Relations between the government and the IMF have been strained in the past, with the lender yet to replace its resident representative after Zambia asked the last one to leave the country nearly two years ago.

Starting debt restructuring negotiations may be enough to convince the IMF to allow the country to access emergency funds.

Mozambique was able to access emergency IMF funding after suffering two powerful tropical cyclone strikes last year, despite it being in default and with a higher debt-to-GDP ratio than Zambia.

That Mozambique was in advanced restructuring talks with Eurobond holders, and the promise of future massive natural gas revenues were enough for the multilateral lender to approve assistance.

“If a country’s debt is unsustainable, the fund can only lend if it has adequate assurances that the member is on track to restore sustainability,” the IMF said. “If such steps involve a debt restructuring operation, we take into account its prospects for success in restoring sustainability.”

Zambia had already requested an economic package from the fund in December, before the virus relief request.

The response prompted Finance Minister Bwalya Ng’andu to complain about being told to first deal with the debt trajectory.

“When you say that we can only have a program after you have exhibited debt sustainability, it’s like you are only given an umbrella after the rains,” he told reporters in February.

[Bloomberg]

41 COMMENTS

  1. PF government killed chances of getting further loans from reputable lenders. They maybe owing more than what is reported. Lending the PF government will be like throwing investments away. Even Chinese have realized that all the strategic assets serving as collateral assets will be in vain as the new government comes to reposses all the country assets with questionable acquisitions. PF must go!

    13
  2. Please do not give Zambia any loans.

    Upto now, we do not know what happened to the Euro bonds they borrowed.

    The only thing that has changed since is our leaders have become very wealthy yet their salaries are modest. Retirees have not been paid pensions yet the president has bought himself a very expensive VVVIP jet.

    And our government has borrowed heavily from the Chinese. We do not know the extent of this debt, or what will happen WHEN we do not pay back.

    For the sake of our future generations, do not lend us any more money until PF thieves are out of office and in jail.

    13
  3. Zambia has already received too much money in donor fund for fighting the virus but the accountability of that money is not transparent. we need to see reports showing how much has been received and how it is being used. We dont want to see money disappearing yet we are seeing little being done in the fight against covid-19.

    14
  4. IMF should not give us any money! We cant risk the future of our children! Not until the Euro Bond funds are accounted for openly, please IMF stay away from these Kleptos!

    10
  5. We dont want another set of 48 mansions without the owner please no more loans for Zambia..the money ends up in PF bandits pockets

  6. The only thing Bloomberg & co are good at is painting a gloomy picture of us in order to make us believe that we are at the mercy of western institutions like IMF & World Bank. They’re even proud to be talking about “strained relations” when the motto should be cooperation.

    We really need to put our heads together to show these people that we can do without them. They will be declared redundant the day we manage to achieve economic growth on our own. We can do it. We must do it.

    2
    12
  7. Lazy Lungu’s govt is like a tick, external parasites, they will drink drink blood from its host till they fall off and die. ….they have no care about repayments

    12
    1
  8. Nine Chale – there you go again…paint us a lovely picture about Zambia’s current forecast with Eurobond repayment imminent…..dont start your hypocrisy about Pan-Africanism here go an preach to your German missus or in your small German village let’s where it we take you.

    halte den Mund, halt den Rand, Halt die Klappe

  9. @Tarino you’re beginning to bore me again with your daily temper tantrums and broken German grammar tanslated apiece to you by your search engine.

    I don’t need to paint a lovely picture about Zambia because everything in our county points to prosperity. Our people walk on copper, gold, diamonds and share habitation with the most beautiful animals on the planet. If you’re too blind to see this wealth, then you’re better off spending the rest of your life in cold, grey, air polluted Britain where your coal is the only natural resource.

    2
    14
  10. Don’t give lungu any money , he will misuse it as usual and plunge our children further into debt…….

    11
  11. Zambia has already started the process to hire financial advisers for a liability-management exercise of its foreign debt, which rose to $11.2 billion by December from $4.8 billion five years earlier…Stup-id-ity is a disease…These guys were warned again and again but look at were we are now…If you vote for pf you need to be in isolation for a billion years.

    12
  12. We don’t need donated money which ends up in politician back pockets, people see no difference but more luxury vehicles and suits meanwhile health officials are sent to get Covid 19 samples by public transport citing lack of vehicles at the ministry.

  13. It’s frightening that any sensible and responsible government can in this damn age allow debt to spiral out of control from about 30% to 110% of gross domestic product within a space of 4 years. To make matters worse, the economy this year is projected to shrink by 3.5%. This PF *****s have without doubt committed a hedious economic crime against this country, Chikwanda and his nephew the now mad one called Miles Sampa need to be shot dead for this. To still keep on claiming we are not in a debt crisis while going ahead to hiring financial advisers for a liability-management exercise of Zambia’s foreign debt is to say the least gutless stupidity of the very worst order, and odour. Sata was a vicious tribal bigot, he was functionally illiterate, he was elected president by Bembas for the…

  14. … Bemba/Bisas to quench Bemba/Bisa stinking tribal bigotry but he ended up f.ucking up not just the Bemba/Bisas but all of Zambia. We are fu.cked up real big time this time around, kunya bebele! It’s the full cycle Zaireanization of Zambia this one.

  15. “Our people walk on copper, gold, diamonds and share habitation with the most beautiful animals on the planet. If you’re too blind to see this wealth,…blah blah”

    What’s wrong with you? Wake up from your self deception ….why are you begging profusely if you have all those riches? You can not even manufacture PPE you are singing out Gold which PF thugs are stealing then investigating themselves…you need a hard slap across your docile face!!!!!!!!!!

  16. Where is KZ ?

    He’s always on slagging off diasporans, now read this above …..,

    Our estimates of $17 billion forigne and domestic debt is right.

  17. For once, I applaud the IMF, no credible financial institution should lend money to a cantankerous nation with a kleptomaniac president whose vile borrowing habits have crippled the country exposing its economy to horrendous downside risks. No more borrowing from anywhere, bafi.kala ba PF must just prepare to bugger off from power.

  18. How do you lend money to an irresponsible govt that can not look after its overpriced $280 000 ambulances …its being used to move furniture really sad.

  19. They are trying to break our economy so they can take everything for free!

    Who was asking IMF whether Zambia’s levels of borrowing could hinder its access?? HH and Co?!

  20. IMF please don’t bury us with more debt, we’re headed for the bottomless pit unless something happened economically. This is where Bally comes in. He has the intellect to lift the nation not scatter scatter leadership u we’re grappling with

    2
    1
  21. Government debt will reach 110% of gross domestic product in 2020, and the economy will shrink by 3.5%,. The above, KZ, is a summary of our economic performance. Sure you will find it within you to spin the truth.

  22. Zambian Citizen

    ” @August 21: Vote PF out and vote for who????? Tiuzeni, malume….”

    Anyone , as long as lungu and pf are history….. Achimwene…..

  23. Things are now so bad in Zambia that every time Chagwa opens his foul mouth, he only encourages the jury to convict him & the judge to increase his sentence. Even the likes of Zinjanthropus Chikwanda who made the mistake as many in PF of severely overestimating Chagwa’s intelligence can see his clear intellectual nudity. He surely isn’t particularly bright: after all, it takes a very special type of cleverness to keep making the same mistakes of thieving & hiding over & over again.

  24. Zambia is already highly indebted so what can the Govt do to make the current Debt Stock sustainable to access cheap IMF Funds? The Govt can’t undo what is done except to reschedule the Zambian Debt Stock. It looks like Trust,Confidence and Integrity are priceless. Once u lose this Trust and Confidence its difficult to regain.

  25. Economics and issues of Finance should be looked upon in the future sense looking clearly at the real there are Its not about the debt incurred previously it’s about the erosion that the corona virus has done to Zambia’s economic gains to RAISE sufficient revenues and perform those loans (to repay)
    Then it’s not like Zambia is bankrupt because Zambia cannot be bought by those loan or bond holders Then also there provisions and options in those loans to renegotiate the terms on principles and interest, to cancel and forgive, to postponed and later repay maturities including refinancing all terms and amounts

    Now we need the IMF facilities because the crisis of the virus…

  26. more than before. Any meaningful Zambian will support that if he has taken interest and seen the way economies here in Zambia and global are poised to perform 2020 to 2021
    In 2020 global growth is projected to average 1.8% to 2.5% and recovery gradual into 2021 It will lose nearly $10 Trillion dollars in output as a result of the fallout and that fallout will show on Zambia There could be loss of employments here and there and poverty will be inevitable because of that global interconnectedness

    So we need the IMF bailouts and facilities to kick start our local economies and perform the Zambia economy and face the global challenges the virus has presented Its beyond politics and political…

  27. (first part to read to connect to the above validations error)

    Economics and issues of Finance should be looked upon in the future sense looking clearly at the real there are Its not about the debt incurred previously it’s about the erosion that the corona virus has done to Zambia’s economic gains to RAISE sufficient revenues and perform those loans (to repay)
    Then it’s not like Zambia is bankrupt because Zambia cannot be bought by those loan or bond holders Then also there provisions and options in those loans to renegotiate the terms on principles and interest, to cancel and forgive, to postponed and later repay maturities including refinancing all terms and amounts…

  28. (1st part then above continued moderation)

    Economics and issues of Finance should be looked upon in the future sense looking clearly at the real there are Its not about the debt incurred previously it’s about the erosion that the corona virus has done to Zambia’s economic gains to RAISE sufficient revenues and perform those loans (to repay)
    Then it’s not like Zambia is bankrupt because Zambia cannot be bought by those loan or bond holders Then also there provisions and options in those loans to renegotiate the terms on principles and interest, to cancel and forgive, to postponed and later repay maturities including refinancing all terms and amounts

    Now we need the IMF…

  29. The PF government should not be given any more borrowed money and even the donors have lost so much confidence in this government that it had to take the Finance Minister to take control of the management and control of Covid-19 response account for them to develop a bit of trust and to make their little contributions. That’s where we are as a country, corruption of over priced fire tenders, ambulances, the magical 48 houses, disappearing Mukula exports and now the plunder of gold resources in N/Western have all contributed to multilateral and bilateral donors giving a vote of no confidence in ba Chagwa’s way of ruling. IMF will need more than just assurances that Mr N’gandu has given. In fact, they must just wait for the total overhaul of government next year.

  30. The confidence of the economic performance is not singly measured and attached to an individual Its based on solid fundamentals though qualities of individuals may add to the confidence in this case the current institution framework and leadership There could never be any time when perceived incidences of corruption will be alleged like any governing Institution ,The ADB has had its own allegations but what works is the institutional framework to deal with cases of corruptions funding from good partners like IMF cannot stop simply because of allegations and perceived qualities of individuals the country has to run and alleviate poverty

    Development is what is needed to address issues of…

  31. Development is what is needed to address issues of balance Financing and infrastructure developments thru those debts was to solve that now growth has been disappointing in some way Our levels of debt is much more manageable and to restructure than others what we need is to Growth the economy and be sustainable so for long-term(GDP per Capital)

  32. Our level of debt is manageable and its not a hindrance to development unless people what it to be so The US is at USD 20 T 104% Debt to GDP,Japan is at USD 12 T 239% Debt to GDP,China is at USD 5.8 T 48% Debt to GDP,France is at USD 2.6 T 102% Debt to GDP,Germany is at USD 2.5 T 68% Debt to GDP,UK is at USD 2.4 T 92% Debt to GDP,South Africa is at USD 180T 52% Debt to GDP,Angola S is at USD 80 T 65% Debt to GDP,Tanzania is at 19 Billion USD debt to GDP of 37% Mozambia at 11 Billion with debt to GDP ration of 92% and lastly Zambia is at USD 13 Billion at debt to GDP ratio of 54%

    You can see the ratios above Debt sustainability is…

  33. is important and part and parcel of Government financing but it should not hinder further financing to spur growth what matters most the Growth in the GDP of the economy and Zambia still has that potential GDP to show a correct debt to GDP ration at much lower number than 54%

    So we need the IMF more than before

  34. MEANWHILE BACK IN THE USA, THEY CAN JUST PRINT 3 TRILLION DOLLARS AND SOON MORE,,, TO SATISFY THEIR PROFLIGACY. NO PROBLEM!!

Comments are closed.

Read more

Local News

Discover more from Lusaka Times-Zambia's Leading Online News Site - LusakaTimes.com

Subscribe now to keep reading and get access to the full archive.

Continue reading