Zambia’s new Finance Minister, Situmbeko Musokotwane, has said in an interview that it was critical to agree to a lending programme with the International Monetary Fund (IMF) because it would give creditors confidence and the government cheaper and longer financing.
Musokotwane, appointed on 27th August by recently elected President Hakainde Hichilema, faces the daunting task of trying to pull the southern African country out of a protracted debt crisis and has pledged to prioritise talks with the IMF.
“We don’t have the money to pay back. This is why it is important that we get on (an) IMF (programme) so that we can re-arrange not to pay next year. I am 100 percent confident that it will be done,” he said.
Zambia, Africa’s second-biggest copper producer, became the continent’s first pandemic-era sovereign defaulter in November when it stopped servicing its $3bn in Eurobonds along with almost all its external debt.
But after Hichilema’s landslide election victory this month over incumbent Edgar Lungu, the country’s dollar bonds and Zambian kwacha currency have rallied on hopes the new administration will bring a swift resolution to its debt woes.
Elevated prices of copper will aid Musokotwane’s cause: the metal accounts for more than 70 percent of the nation’s export earnings.
Hichilema’s administration aims to more than double copper output to as much as two million metric tonnes yearly by 2026 and ultimately about three million tonnes in 10 years Musokotwane said, referring to the metal used in electric cars as the “new oil”, the Bloomberg news agency reported.
“We are going to push production of copper by creating a good environment for more investment,” he said. “You will be amazed how much foreign exchange this country is going to make. You will not know what to do with the dollars that this country will be receiving.”
Of Zambia’s external debt, some $3bn is in Eurobonds, $3.5bn is bilateral debt, $2.1bn is owed to multilateral lending agencies and another $2.9bn is commercial bank debt.
A quarter of the total is held by either China or Chinese entities via deals shrouded in secrecy clauses, making negotiations for IMF relief particularly tough.
Musokotwane has said that he will present a budget within 90 days of Hichilema’s swearing-in last Tuesday and in the medium- to long-term his priority would be creating jobs.
Source: www.aljazeera.com
