Zambia moved closer to becoming the first African nation to default on its dollar bonds since the onset of the coronavirus, making it a test case for nations worldwide battling to meet obligations to a range of lenders from bondholders to Chinese state banks.
Zambia is shelving projects that are not almost complete and will renegotiate loans, as it seeks to contain ballooning debt and entice the International Monetary Fund (IMF) to restart talks on a support package.
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Zambia is suffering a severe hangover from its decade long commodity boom, as mounting debt and energy shortages are crippling the once vibrant economy. Zambia has seen a decrease in GDP growth from an average of 7.4% from 2004-2014 to barely 3% for 2016. This figure is only slightly above population growth. When annual inflation is added – which despite having decreased from 22.9% in January to only 8.8% in November – it reveals that the livelihoods of Zambians are actually regressing. This slowdown has affected the government’s bottom line, as Zambia’s national debt continues to pile up.
Zambia and German have signed a EURO 97.5 million technical and financial cooperation grant for water, sanitation and governance improvement programs for the period 2017 to 2018.
Finance Minister Felix Mutati says the financial market in the country is stable despite what has happened to Inter Market Bank.
Details of the Zambian Government’s 2017 budget have recently emerged with the Minister of Finance stating that “turning the economy around requires that we make hard choices and implement difficult reforms”.
Zambia has been battling the problem of maize smuggling to neighboring countries following a high demand for the commodity. Zambia is among the few countries with surplus maize following poor rains experienced in the 2015/2016 season in southern Africa.
