Zambia’s new finance minister, Situmbeko Musokotwane, said in an interview aired on Sunday that it was critical to agree to a lending program with the IMF because it would give creditors confidence and the government cheaper and longer financing.
Musokotwane, appointed on Friday 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 prioritize talks with the IMF.
He told public broadcaster ZNBC he was confident Zambia would get an IMF program before the end of the year and thereafter restructure its debt.
The government has a $750 million Eurobond due next year but says it cannot repay it.
“We don’t have the money to pay back. This is why it is important that we get on (an) IMF (program) so that we can re-arrange not to pay next year. I am 100% confident that it will be done,” he said.
Zambia, Africa’s second-biggest copper producer, became the continent’s first coronavirus-era sovereign default in November after failing to keep up with payments on its more than $12 billion in international debt.
But after Hichilema’s landslide election victory this month over incumbent Edgar Lungu, the country’s dollar bonds and kwacha currency have rallied on hopes the new administration will bring a swift resolution to its debt woes.
Of Zambia’s external debt, about $3 billion is in Eurobonds, $3.5 billion is bilateral debt, $2.1 billion is owed to multilateral lending agencies and $2.9 billion 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 also told ZNBC that Zambia hoped to raise annual copper output from its current level of roughly 800,000 metric tons to 2 million metric tons by 2026.
He said he would 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.