[ad_1]
- The change of power in Zambia has improved the country’s economic prospects.
- Investors are optimistic that the new administration will lead to a sustained recovery.
- Zambia has nearly $ 13 billion in external loans after obtaining IMF financing.
Zambia’s new president, Hakainde Hichilema, is transforming the country’s economic fortunes in just a week.
The national currency and dollar bonds have surged to become the best performing in the world since he was announced the winner in the August 12 election.
His choice of economist Situmbeko Musokotwane as finance minister was welcomed by investors, as were his statements that he would quickly strike a financing deal with the International Monetary Fund and woo foreign investment.
Zambians have grown accustomed to bad news in recent years.
Copper production, which accounts for more than 70% of export earnings, stagnated as the government clashed with mining companies. The kwacha currency depreciated from 5.10 per dollar in late 2011 to a record low of 22.68 this year. Annual inflation hit nearly 25% in July, its highest level in nearly two decades.
The change of power has improved the country’s economic outlook, with investors optimistic that the new administration will bring about a sustained recovery and restructure nearly $ 13 billion in external loans after securing funding from the IMF. While Hichilema had said he hoped to strike a deal with the fund by April, Musokotwane is aiming for October.
“It’s night and day right now,” said Neville Mandimika, economist and bond strategist at FirstRand Bank in Johannesburg. “The wait has been completely increased.”
Hichilema (59) studied economics in the UK, was CEO of an accounting firm and unsuccessfully ran for president five times before finally winning this month. Former President Michael Sata, whose party he ousted, dubbed him a “calculating boy” – a snipe at his speeches laden with economic jargon.
Hichilema took advantage of widespread discontent over rampant unemployment and soaring prices, especially among young voters, to secure his landslide election victory.
He was sworn in on August 24 and pledged to stabilize the country’s finances after years of overspending by the administration of his predecessor Edgar Lungu which resulted in Zambia becoming the first African defaulter on sovereign debt. since the coronavirus pandemic struck.
High on the new administration’s priority list is reestablishing ties with the mining industry.
Musokotwane wants to more than double annual copper production to up to two million metric tonnes by 2026. This would help bolster foreign exchange reserves, which have shrunk due to rising debt-servicing costs.
“You will be amazed at how much currency this country will earn,” the finance minister said on Friday after taking the oath. “You won’t know what to do with the dollars this country receives.”
* With the help of Taonga Clifford Mitimingi.
[ad_2]Source link
