Business News

Business News (101)

THE DEBT RESTRUCTURING PROCESS AND THE IMF SUPPORTED PROGRAMME

Lusaka, Sunday, 19th June 2022 – In light of public statements by certain sections of society on the status of the International Monetary Fund (IMF) Supported Programme and the debt restructuring process, the Ministry of Finance and National Planning considers it necessary to clarify on some matters of concern and on others that have been misrepresented.

The New Dawn Government reached a Staff Level Agreement (SLA) with the International Monetary Fund barely three (3) months after assuming office in August, 2021. This was on the backdrop of futile efforts previously pursued for more than five (5) years. The Government’s anticipation was for the IMF Supported Programme to be agreed upon by June 2022, however, there are some finalisation steps, mainly related to the debt restructuring process, that still need to be undertaken before the IMF Management and Board considers and approves the programme.

The consideration of Zambia’s application for an Extended Credit Facility by the IMF Board and the country’s debt restructuring process, are interrelated. Therefore, getting the IMF Board approval is centred on getting financing assurances from the Official Creditor Committee (OCC) under the G20 Common Framework for Debt Treatment. Their pace of progress, however, is not entirely dependent on the Zambian Government’s efforts. Notwithstanding, it is our expectation that with the due processes followed, we will get an IMF Supported Programme this year and place our debt on a sustainable trajectory, once again.

For the information of stakeholders, negotiations with our Creditors under the Common Framework are supported by an independent Debt Sustainability Analysis conducted by the IMF and the World Bank, accompanied by reforms, to ensure the future sustainability of public debt through an IMF Supported Programme (in Zambia’s case a 3-Year Extended Credit Facility). The whole process is systematic and entails substantial traction as we move towards the attainment of credible assurances on how the country’s debt will be treated by the Official Creditor Committee before the IMF staff submit Zambia’s case to the IMF Management and the Board for consideration.

Some key milestones are as follows:

  1. Finalisation of the Debt Sustainability Analysis (DSA) with the IMF and the World Bank. This has been done;
  2. Pledges by multilateral lenders to provide concessional financing to Zambia as part of the effort to resolve the country’s financing limitations based on the DSA results;
  3. Convening the OCC (mainly bilateral related lenders) to discuss Zambia’s request for debt relief under the G20 Common Framework for Debt Treatment. This action has commenced; and,
  4. Convening, immediately after the OCC, a committee of Commercial Lenders (Eurobonds, Commercial Banks, and Private Lenders etc). This is pending completion of discussions by the OCC.

Pursuant to some of the milestones listed above, the Government has regularly engaged both Official Creditors and Private Creditors. They have been provided with economic policy and debt data, with a view to facilitating decision-making and successive meetings of the two creditor groups.
High-level bilateral discussions have been held, too. One such engagement was the virtual summit meeting between Mr. XI JIPING, the President of the Peoples Republic of China (Zambia’s biggest bilateral creditor and the world’s second-biggest economy) and Mr. HAKAINDE HICHILEMA, the President of the Republic of Zambia (Currently one of Africa’s best investments destinations). The engagements resulted in the first successful meeting of the OCC on Thursday 16th June 2022, under the auspices of the Paris Club and the G20. The meeting with private creditors will follow through after a consensus is reached by Official Creditors.

The Government has been engaging multilateral partners for concessional financing as part of the effort to resolve Zambia’s fiscal limitations. As announced before, the engagements have culminated in several benefits such as the pledge by the World Bank to support the national budget through a Development Policy Operation. As soon as the IMF Supported Programme is approved by the IMF Board, it is envisaged that the World Bank will supply funding amounting to US$275 million over the next three (3) years.

Furthermore, the Bank is providing sizeable positive net flows to Zambia. Under IDA19, the Bank is committing approximately $959 million to support Zambia’s recovery from the multiple debt and economic crises and help to institute reforms for inclusive growth and poverty reduction. Of this, U$$294 million has already been committed for scaling up social cash transfers and projects to strengthen the COVID-19 response, including vaccination and emergency health financing to improve service delivery.

The remaining U$$665 million will be presented in three operations to the World Bank Board for approval within June 2022. The program includes two results-based operations, the first to reinvigorate growth in agriculture and support reform of the agricultural subsidy regime and the second to strengthen decentralized public service delivery while enhancing public financial management, accountability, and citizen engagement and will support the increased resource allocation towards Constituency Development Fund. The third operation will finance additional social protection spending in response to various shocks.

Furthermore, upon agreement of the Country Assistance Strategy during the second half of 2022, financing is also expected from the Africa Development Bank (AfDB) over the next 3 years. This implies that over the medium-term, an estimated US$500 million or more will be available to Zambia (through the Africa Development Fund), for economic and social development. This is another demonstration of a functional and cordial relationship between Zambia and her multilateral partners.

Going forward, the Government will continue to work tirelessly toward returning the country to a state of fiscal stability that will facilitate sustainable growth. Through the soon-to-be-launched Eighth National Development Plan (8NDP), the Public-Private Dialogue Forum and other development delivery frameworks, the New Dawn Administration will continue to make sincere efforts targeted at trending the living conditions of our fellow citizens towards equal opportunities, sustained prosperity and poverty reduction, on the platform of a stabilized and transformed economy that inspires improved investor confidence, facilitates more local and foreign investments, creates more opportunities and jobs, and nurtures the economic freedom of the people of Zambia.

Issued by:
(Original Signed)
MINISTRY OF FINANCE AND NATIONAL PLANNING

Source; Lusaka Times

International Monetary Fund -IMF- Deputy Managing Director Antoinette Sayeh is today expected in the country for a two day visit.

While in Zambia, Ms. Sayeh is expected to hold high level talks with the government focused on recent economic developments.

The talks will look at the effect of global economic developments such as high oil and fertilizer prices on the Zambian economy.

The talks will also discuss progress made on debt restructuring which the Ministry of Finance has described as an important step towards a formal programme with the IMF.

Ms. Sayeh will also pay a courtesy call on President Hakainde Hichilema, and hold discussions with Finance Minister, Situmbeko Musokotwane and the Bank of Zambia Governor Denny Kalyalya.

She is also expected to hold discussions with Members of Parliament, Civil Society and other Development Partners.

Ms. Sayeh will be accompanied to the high-level meetings with Zambian authorities by Acting IMF Resident Representative Carlos Cacares, IMF Mission Chief for Zambia Holland Allison and other IMF staff.

Source: BBC

The Zambia Revenue Authority -ZRA- has engaged the Government for support to modernize border infrastructure at Sakania Border Post.

ZRA Commissioner General DINGANI BANDA says once Sakania border infrastructure is improved, it will ease and boost trade between Zambia and the Democratic Republic of Congo -DRC-.

He says this will also ease traffic congestion challenges that are normally faced at Kasumbalesa border post.

Mr. BANDA says the border facility has potential to reduce transit costs incurred in cross-border movement because truck drivers will have the option of using Sakania instead of driving to Kasumbalesa.

He said this during the tour of the border where he noted that the Authority will engage other government agencies to establish their presence at the border in order for the two countries to work as one team, which will improve day-to-day operations at the
order.

Mr. BANDA also led ZRA Senior Members of staff on a tour of the Sakania border post on the DRC side to appreciate how the neighbouring country is modernising its infrastructure.

This is according to a statement issued to ZNBC News by ZRA Acting Corporate Communications Manager OLIVER NZALA.

 

Source: ZNBC

A Sub-Saharan Africa Regional Economic Outlook Report has maintained Zimbabwe’s economic growth targets with local authorities being implored to guard against global shocks threatening current gains.

The report compiled by the International Monetary Fund (IMF), notes that developing economies including Zimbabwe, are not being spared from global economic shocks arising from Russia’s special military operation in Ukraine.

This has seen most developing economies grappling with rising commodity prices that have led to inflationary pressures due to surging global oil and food prices.

The report reveals that most global economies will experience an average growth rate of three comma eight percent.

However, in terms of its analysis, the report has maintained Zimbabwe’s economic growth forecast for the year at 3.5 percent, despite resurfacing inflationary pressures.

Economic experts believe addressing current economic challenges to boost spending, preserving the value of the local currency and focusing on increased social services development as well as poverty alleviation are key to further growth.

“The growth should translate into development that is looking at increased spending by the majority and curbing high poverty levels,” said Development Economist, Dr Zack Murerwa.

“The need to preserve the value of the Zimbabwe dollar should be taken as a major priority so that the economy has its own monetary policy while sustaining competitive exports,” added Industrialist- Dr Abel Mubango.

Some of the key features in the report include the need by central banks to tighten money supply systems and interest rates on the back of inflationary pressures, inclusion of increased private sector led economic activity and fiscal policies that protect the vulnerable against rising food and energy prices.

Source: ZBC News

Zimbabwe's Zimbaqua mine, which employs an entirely female workforce, has opened a jewellery line to showcase the aquamarine stones that they mine.

The mine was set up three years ago by its founders who were keen to train women and give them opportunities to earn and make a good living for themselves.

Fifteen women joined the project and since then the mine has been successfully run by 35 women to date.

The manager of the mine, Rumbidzai Gwinji - also known as Rumbi - told the BBC Newsday programme that her team was excited by the opportunity offered by the jewellery line where profits might be even greater.

Quote Message: This is super exciting because now we have become one of the first mines to actually mine a jewellery brand. This is exciting for the team because now we are not just mining aquamarine but we are also making the final product and it's a huge step for us."

This is super exciting because now we have become one of the first mines to actually mine a jewellery brand. This is exciting for the team because now we are not just mining aquamarine but we are also making the final product and it's a huge step for us."

The jewellery line consists of earrings, necklaces and rings.

She said the mine offered the women a reliable source of income to take care of their children and their families.

Quote Message: We are a very close team. Generally it's a calm and peaceful environment. Singing while getting the work done is very real at our mine. Dancing during break sessions and laughing and being happy is the kind of environment that women provide when they work together."

We are a very close team. Generally it's a calm and peaceful environment. Singing while getting the work done is very real at our mine. Dancing during break sessions and laughing and being happy is the kind of environment that women provide when they work together."

Watch:

Source: BBC

Patriotic Front (PF) Member of the Central Committee Raphael Nakachinda has said that Zambia’s economy is as good as nonexistent ever since the UPND took over the governance of the country.

Speaking at a media briefing in Lusaka today, Mr Nakachinda said barely 8 months after the UPND governance, the country’s economy is a national disaster as the cost of living has become extremely high for an ordinary citizen to afford.

“And if you may recall, we told the Zambian people that soon they will come back to us to thank us for quickly pointing out that this government has no direction,” Mr Nakachinda said.

Mr Nakachinda said it is regrettable that the country’s democracy is under threat in the new dawn government.

He said that the UPND government under Mr Hichilema are using intimidating tactics to silence people who are critical to their way of running the country.

Mr Nakachinda said that all Zambians are equal stakeholders and no one should be intimidated for expressing their freedom of expression.

“Zambia has always existed, but it looks Zambia was born the day HH was elected. We have had Presidents in the past, Presidents just like governments come and go, there shall surely be others and another is surely coming after HH is gone in 2026”, he said.

The PF Member of the Central Committee said that President Hichilema should not start blaming Zambians who are questioning him for his failure to fulfil his campaign promises.

He advised President Hichilema to learn from his Malawian counterpart who he said over-promised and scored nothing which resulted in widespread demonstrations in that country.

“He swallowed his pride by first dissolving the cabinet and openly apologized to the Malawian people, We should not be shy to borrow the Bemba saying that ‘INSONI EBUNTU.’ nga naufilwa kuichefya,” Mr. Nakachinda said.

And commenting on the arrest of Economic and Equity Party President Chilufya Tayali, Mr Nakachinda charged that his arrest his an indictment on President Hichilema.

He recalled that in 2015, while in opposition; Mr Hichilema claimed that he used to receive copies of sensitive security intelligence briefs before the commander in chief President Lungu then and yet no one arrested him. Mr Nakachinda has appealed to the international community to take a keen interest in what is happening in the country instead of only focusing on their business interests.

Meanwhile, Patriotic Front Media Director Antonio Mwanza has charged that there is no investor confidence in the country under the current Government.

Speaking on Live Radio Special Programme, Mr Mwanza said this is despite President Hakainde Hichilema dubbing himself the Chief Marketing Officer of Zambia.

Mr Mwanza said President Hichilema has since made 12 international trips with no investor coming into the country.

“There was a lot of talk about Investor confidence. The President dubbed himself the Chief Marketing officer of this country, he made 12 international trips with Zero results,” Mr Mwanza said.

He added that the Zambian People are dealing with a government full of fake promises.

Mr Mwanza bemoaned the Propaganda of labelling the Patriotic Front members as thieves, adding that the New Dawn Administration has failed to run the corruption fight because they accuse people of being corrupt without having evidence.

Mr Mwanza said digging into people’s homes with the hope of finding hidden money is a ploy to paint a bad picture of the Former Ruling party and that seven months since the New Dawn took office, people have been accused of being corrupt but no one has been charged or arrested.

“Investigative wings went to the House of former National Chairman Mr Samuel Mukupa they dug holes but they did not find anything. We want to reiterate what the acting PF President said, stop. “The President is saying those who stole, should bring the money. We as Patriotic Front have suffered the Propaganda blunt that we are thieves. We want to be cleared in the courts of law. Arrest everybody, take them to court, prosecute them and produce evidence,” he said.

And Mr Mwanza said the Government should stop Victimising civil servants and that the issue of trying to blame other people for failure to provide a service should come to an end.

He said it is therefore not right for Minister of Health Sylvia Masebo to say that Politics has taken centre stage in her Ministry.

Source: Lusaka Times

The Jesuit Centre for Theological Reflection (JCTR) has said that it is yet to be seen if the Government’s efforts to reduce the cost of living will work amid the increase in fuel pump prices.

JCTR Executive Director Fr. Alex Muyebe, S.J. said in a statement that the cost of living in Zambia was rising in contrast to the recent trend in national inflation which has been on the decline.

Fr. Muyebe said JCTR is aware that the Government is citing delivery of Constituency Development Fund, rolling-out of social cash transfer programme, implementation of free education programme, payment of salary arrears for local government employees, recruitment of health and teachers as efforts to cushion Zambian households from the rising cost of living.

He said the JCTR’s Basic Needs and Nutrition Basket (BNNB) survey recently for Lusaka stood at K9, 049.25 for the month of January 2022, showing a K689.45 increase in comparison to December, 2021.

“Since January 2022 the cost of living in Zambia has been on the upward trend corresponding to the rise in commodity prices. This scenario is not surprising given that the rise in fuel pump prices generally does have a spiral effect on the commodity prices in Zambia. The fuel pump price adjustment by almost K10 between December 2021 and April 2022 and the resultant adjustment in the commodity prices is inevitably going to hit hard on the majority of the Zambian people whose incomes are already very low. According to a study report by Karl Pauw, Bernard Tembo and James Thurlow on “COVID-19 in Zambia: Impacts on Production, Poverty & Food Systems” published on 6th April 2021, poverty rate in Zambia increased by 4.3 percent due to the COVID-19 pandemic,” Fr. Muyebe stated.

“The rising cost of living is just setting on course, and it looks likely that it is going to push more households into absolute poverty. In the midst of this, the Government has urged citizens to be extra resilient because it is aggressively working towards stabilizing and ultimately lowering fuel pump prices and improving the general economic welfare of Zambians.”

Fr. Muyebe added:”It is yet to be seen if what Government is pointing to as its key commitments such as delivery on Constituency Development Fund, rolling-out of social cash transfer programme, implementation of free education programme, payment of salary arrears for local government employees, recruitment of health and education workers will be enough to cushion Zambian households from the pangs of the rising cost of living when the fuel pump prices still remain very high in the short term. What does the Government say to a poor household in Chibolya compound which is not a beneficiary of any of the above listed programmes and yet it now has to pay more for food and other basic necessities?”

Fr. Muyebe observed that Zambia’s recent inflation rate is not corresponding with the cost of living.

“This signified an 8.24percent increase in the cost of living between December 2021 and January 2022. The BNNB for Lusaka has continued to rise since January 2022. This is in contrast to the recent trend in national inflation which has been on the decline. According to the Zambia Statistics Agency Zambia’s inflation rate for March has declined to 13.1 percent from 14.2 percent recorded in February driven by the base effect, which compares inflation in the corresponding period of the previous year,” he said.

Fr. Muyebe emphasised:”The point that needs to be highlighted is that although these two indicators are intimately related, they are not synonymous. The explanation lies in the definition of inflation; “inflation measures the rate of increase of general prices level”. The opposite is deflation, “the general decline in prices for goods and services”. Therefore, a decline in inflation rate does not mean that prices have necessarily reduced.”

“All it means is that the rate at which these prices are rising over the comparable period has reduced. We can only talk about reduction in prices if the inflation rate falls below zero (in this case it becomes deflation). Inflation presents the big picture. As the cost of goods and services rises, the buying power of the Kwacha falls. The inflation rate is often measured by the change in the Consumer Price Index (CPI), a monthly measure by the Zambia Statistics Agency that averages the cost of a basket of goods and services from areas around the country. It reports the result as a percentage rise or drop in CPI,” Fr. Muyebe said.

Source: Lusaka Times

The Zambia Consumer Association (ZACA) has appealed to the government to put on hold the impending electricity tariff increase until the fuel price stabilizes on the international market.

Speaking to ZANIS in Kitwe today ZACA president Juba Sakala said government should put on hold its plans to increase the electricity tariffs so that people are not overburdened in view of the current escalating fuel prices.

Government has planned to increase the electricity tariffs this year in a bid to attain cost-reflective rates that will promote investment in the energy sector.

Mr. Sakala said combining the current escalating fuel prices and increased tariffs will be unbearable for consumers as such government should postpone the plans and observe how the cost of fuel will fluctuate on the international market.

“We know the escalating fuel prices is beyond government’s control but the government needs to show readership and find ways of shielding the consumers from external shocks such as this, we also need government to put on hold the impeding electricity tariffs increase for about three to four months until fuel prices stabilizes,” Mr. Sakala said.

He has since called on government to devise means of absorbing the impact of external economic forces so as to protect consumers.

The Energy Regulation Board (ERB) yesterday adjusted upwards the pump prices of petroleum products by K4.54/litre for Petrol, K4.68/litre for Diesel and K3.93/litre for Kerosene.

Meanwhile, the Emerald and Semi-Precious Association of Zambia (ESMAZ) has urged government to introduce tax exemption incentives on the importation of mining equipment in order to attract investors in the mining sector.

ESMAZ president Victor Kalesha said it will be difficult to attract investors in the sector with the prevailing escalating fuel prices and the unstable local currency unless strategic incentives are introduced to ensure that investors recoup their investments.

“Government can allow free importation of mining equipment as investors would be assured of recovering their investments despite the high fuel prices and the unstable Kwacha, without such initiatives it would be difficult to attract investments in the mining sectors,” Mr. Kalesha said.

He noted that last night’s pronounced fuel pump price hike will make business tough as the cost of doing business will go up.

He however noted that the new dawn government is already working towards bringing down the cost of doing business and to lower the general cost of living.

Source: Lusaka Times

Economist Trevor Simumba has charged that Zambia’s economic problems should not be blamed on the ongoing Ukraine war.

Presidential Spokesperson Anthony Bwalya has over the last few days been announcing that Zambia’s economic woes will worsen due to the effects of the Ukraine war on global oil and fertiliser supply.

But Mr Simumba said it is very lame and lazy for the Zambian government to claim the economic problems are as a result of the Ukraine war.

He stated that Zambia’s current economic malaise is a result of past ineptitude of the PF and the current Government’s total fear of implementing decisive policy reforms.

Mr. Simumba accused the UPND government of playing the blame game.

“We even have the Central Bank blaming the transition for dollar shortages on the market. Honestly seven months down the road we cannot see any real policy decisions on KCM/Mopani, dismantling of local debt arrears, local content, industrial policy etc,” he said.

“What recovery efforts are those that are affected by the War in Ukraine?”

He added, “Subsidies have been removed according to Govt. Oil and fertiliser are not examples of reforms being affected. Those are factors of production. More importantly, we can buy fertiliser from other sources.”

He observes that Zambia already pays 50% above world market prices for fertiliser.

“The war has no impact on Zambia’s debt negotiations.”

Source: Lusaka Times

State House says President HAKAINDE HICHILEMA fully understands citizens’ apprehension and anxiety regarding the possible upsurge in the cost of living arising from the turmoil around global oil prices.

Presidential Spokesperson ANTHONY BWALYA says government is aware, that any adverse changes in international oil prices will have a less than desirable effect on local fuel prices and consequently impact negatively on the welfare of the people.

Mr. BWALYA says the pain that the citizens will suffer in the short-term is the foundation that is needed as work towards building a stable, sustainable and productive economy for all, where the interests of the most vulnerable will be protected.

He says the country is coming from a legacy where people were made to believe that expensive, debt driven subsidies will forever keep fuel prices low.

Mr. BWALYA says this was not only unsustainable as it was also hurting government’s own ability to create jobs, provide education, health, social protection, and pensions to its people.

He says the new administration has made some bold decisions targeted at building long term economic resilience through job creation as seen by the massive health and education sectors recruitment.

Mr. BWALYA says government has also invested in skills development for the youth as seen by the expansion of bursary support to over 5,000 students at the University of Zambia alone, and the expansion of social protection support to the most vulnerable.

He says the new administration is continuing to actively pursue the utilization of collaborations as a way of mitigating disruptive cycles in the supply and pricing of fuel in the medium to long term, and better protect the welfare of citizens.

This is contained in a statement made available to ZNBC News.

Source: ZNBC

Page 1 of 8