(Xinhua) -- Delays by the Zambian
government to secure an aid package from the International
Monetary Fund (IMF) has sent shivers among international
investors who have now developed a "wait and see" attitude,
resulting in the yields for the country’s Eurobonds rising,
analysts have said.
Zambia’s yields on its Eurobonds
have risen to about 10 percent, making the country’ debt second
to Mozambique globally.
Until recently, Zambia’s yields, among the highest of any
sovereign in the Eurobond market, were helping attract
Analysts are now skeptical as to whether Zambia will agree on
a bailout package with the IMF that has expressed concern on the
country’s debt situation, which it has described as being at
risk of debt distress.
There have also been speculations about the country’s true
debt situation, with the government insisting that its debt
currently stands at 9.1 billion U.S. dollars, according to
revised figures, while other sources have put the debt much
higher what is portrayed by the government.
"This is not sitting well with investors because Mozambique
is now known to have defaulted on its debt and they (investors)
fear Zambia may be next. The consequence is that non-resident
investors seem to be withdrawing or cashing out," economist
Chibamba Kanyama said.
The economist stated that the failure by the government to
issue a comprehensive statement on the current engagement with
the IMF was forcing investors to trade on secondary information
they were getting from other sources.
"There is a definite cure to this so that we avoid a free
fall on yields because any further rise makes it impossible to
service the Eurobond.
"Government can enhance its communication,
engage the market and inform everyone about current economic
stabilization program," he added.
According to him, all is not lost for Zambia as the country
has systems strong enough to inspire confidence but added that
this should be done as a matter of urgency.
All the investors want is proactive engagement about market
developments, he said, adding that the government should prove
to investors that it was concerned about negative market
perceptions and was taking action to stabilize the situation.
His views have been supported by the Africa Confidential, a
renowned specialist publication on Africa.
In its latest analysis of Zambia dated June 1, the
publication notes that the current situation was a reflection
that the Zambia government has failed to yield confidence before
the IMF following the continued borrowing for infrastructure
According to the publication, last year, investors still
believed there was a chance of an IMF financial bailout but that
the continued borrowing may have scotched any chances of a
"Experts say an IMF program and a loan to support balance of
payment are essential. But the IMF wants Zambia to show that it
will stop borrowing and get debt on a stable path," it said.
According to the publication, while Zambia’s debt has
continued to rise, its international reserves have fallen to
just 1.8 billion dollars, resulting in the local currency
begging to totter as the central bank has stopped defending the
But the government has insisted that there is no need to hide
any information, adding that it has been transparent in both in
its dealing with the IMF and on the debt situation.
Its finance ministry said in a statement that it was ready to
engage and provide fiscal and debt information with all
stakeholders as it has nothing to hide.
The government, it said, has not backtracked on its
engagement with the IMF and was committed to finalizing the
deal, adding that a full debt sustainability analysis was
conducted and the results will be shared with the IMF.
Zambia has been seeking for an IMF aid package of 1.3 billion
dollars since June 2016 but talks have been on and off.
Zambia cancels 500 mln USD loan guarantee for emergency
LUSAKA Zambia (Xinhua) --
The Zambian government on Wednesday
announced the cancelation of a 500 million U.S. dollars
sovereign loan guarantee it secured for the country’s power
utility for emergency electricity supply at the height of acute
Zambian President Edgar Lungu signed the sovereign loan
guarantee on September 9, 2016 from a local firm, Stag African
Investments Limited after he won re-election and before he
appointed a new cabinet on behalf of state-run power utility,
But Secretary to the Treasury Fredson Yamba said Finance
Minister Margaret Mwanakatwe recalled and cancelled the
sovereign guarantee loan on April 24, 2018 issued in favor of
Stag African Investments Limited.
"Since the issuance of the sovereign guarantee, all the
conditions were fully met by Zesco but no disbursements were
made by Stag African Investments over a prolonged period and
consequently, the Ministry of Finance made recourse to other
financing options in support of Zesco’s need for the critical
electricity power imports," he said in a statement.
The official further said due to significant amount of the
loan, the term of the loan agreement was that it required to be
secured by a sovereign guarantee.
EU pledges to continue supporting Zambia in
public finance management
LUSAKA Zambia (Xinhua) --
The European Union (EU) on
Wednesday pledged to continue supporting Zambia in strengthening
its public finance management in order to improve accountability
and utilization of public resources.
Gianluca Azzoni, Head of Cooperation at EU delegation to
Zambia, said the organization was delighted to have contributed
to the strengthening of Zambia’s public finance management
through training of public officers under its capacity building
support to the Ministry of Finance.
The EU, he said, was hopeful that the finance ministry will
uphold reforms in public finance management as it was cardinal
in ensuring prudent utilization of resources.
"We are confident that the Ministry of Finance is fully
committed to the reforms and the activities that have been
supported under the program in order to ensure the
sustainability of the results achieved," he said at the
completion of the first part of the capacity development
The EU provided 1 million Euros in the first part of the
project which ran from 2015 to March this year and saw the
training of 75 public workers dealing with public finance.
The capacity development program was one segment of a broader
European Development Fund program for Zambia’s public finance
management, accountability and statistics.
Fredson Yamba, the Secretary to the Treasury, hoped that the
EU will consider further support to strengthen the country’s
public finance management.
Zambia reviews farmer input support program after challenges
LUSAKA Zambia (Xinhua) --
The Zambian government on Friday
said it has reviewed a program of providing subsidized farming
inputs to smallholder farmers after a chaotic experience in the
last two farming seasons.
The provision of farming inputs to smallholder farmers under
the electronic voucher system (E-voucher) faced chaos in the
2017/2018 farming season as well as the previous season,
resulting in late delivery of the inputs to farmers.
The E-voucher system, which requires farmers to use
electronic cards to access farm inputs directly from
agro-dealers, was introduced during the 2016/2017 season to
replace the Farmer Input Support Program (FISP) introduced in
Minister of Agriculture Michael Katambo said the government
has decided to make changes to the system, with about 40 percent
of farmers on the program reverting back to the conventional
method of distribution of the inputs during the 2018/2019
He told reporters during a press briefing that some farmers
will be reverted back to the conventional method of distribution
of the farming inputs until challenges experienced in the
implementation of the E-voucher system in last farming season
The move, he said, was also meant to avoid putting the
country’s household food security at risk.
Zambia’s annual inflation increases to 7.8
percent in May
LUSAKA Zambia (Xinhua) --
Zambia’s year-on-year inflation
increased to 7.8 percent in May from 7.4 percent recorded in the
previous month, its statistics agency said on Thursday.
"This means that on average prices of goods and services
increased by 7.8 percent between May 2017 and May 2018," Goodson
Sinyenga, acting director of the Central Statistical Office (CSO)
told reporters during a press briefing.
He attributed the increase in the annual inflation to price
movements in food and transport.
According to figures, the year-on-year annual food inflation
rate was recorded at 6.9 percent compared to 6.5 percent the
previous month, indicating an increase of 0.4 percentage points
while the year-on-year annual non-food inflation rate for May
was record at 8.9 percent from 8.4 percent recorded last month.
The country also recorded an increase in the month-on-month
inflation to 0.6 percent in May from 0.4 percent in April, he