Good morning. Here’s what you need to know
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Govt spends K15.2 billion in April, debt servicing gulps K3 billion
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European Union allocates €359 million budget support to Zambia’s health & education with €5.1 million emergency support for the drought
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World Bank’s $2.5 Billion loan to Nigeria may arrive early
In Local Business and Finance News
A Credit Rating Agency has assigned Indo Zambia Bank (IZB) a positive credit rating due to its fiancial position and ability to meet its obligations over an extended horizon. Premier Rating Services has assigned the Bank a Long Term Rate (LTR) of AA- and a short-term rating of 1. Speaking at a media briefing in Lusaka, PRS Chief Executive Officer Dionysius Makunka said the AA- rating signifies that investors can have confidence in the Bank, making it an attractive choice for long-term investment. “Indo Zambia Bank’s AA- rating signifies its robust financial position and ability to meet its obligations over an extended horizon,” Mr. Makunka stated. Mr. Makunka added that the Short-Term Credit Rating (STR) of 1, highlights the Bank’s capacity to honor its immediate payment obligations and assures depositors, lenders and investors of the Bank’s ability to meet short-term commitments. “With efficient liquidity management and strong liquidity buffers, IZB can navigate short-term challenges effectively. Both the LTR of AA- and STR of 1, place IZB’s obligations in the investment grade category.” Read more: MoneyFM
ActionAid Zambia has observed that the country has been having challenges in properly taxing the mining sector as well as handling the amount of tax avoidance and evasion through illicit financial flows. Organization Tax and Education Coordinator, Ucizi Ngulube told Money FM News in an interview that 60 years after Independence, the country is still losing huge amounts of money that could be channeled towards the national budget and be able to increase funding to Education to 20 percent in line with UNESCO standards. Read more: Money FM
Zambia, could see the exchange of dollar bonds as early as end of May to replace the 2022, 2024 and 2027 defaulted assets. Speaking at a public lecture held at the Copperbelt University organised by the USAID, Secretary to the Treasury Felix Nkulukusa informed the audience that all things constant, the Southern African nation could see new dollar bonds trading as as early as end of May. “Of the $13.34 billion, we owe bilateral creditors an estimate of $6.3 billion (17 of them), about $3.84 billion to euro bondholders and other private creditors an amount of $3.2 billion. Where are we with each one of these? With the official creditors, we have concluded, and as for the bondholders, we reached an agreement in March and are now negotiating to sign. If all goes well, by the end of this month, we will have signed the documents and will start servicing the debt (dollar). As for the other creditors, the $3.2 billion, we have categorised them with the $1.8 billion (accounting for 18% of the total debt) of which is owed to Chinese commercial banks, namely Bank of China, China Development Bank, Industrial Commercial Bank of China and Polytechnic- we are making good progress. All things being equal, we can reach an agreement before the end of summer.” Secretary to the Treasury Felix Nkulukusa said. Read more: The Business Telegraph
Government’s realigned national budget necessitated by the drought will be presented to Parliament in the next session for approval. In addition, the government announced that the setbacks caused by the drought and the reported abuse of public funds in some sectors would not deter the treasury from ensuring that the credibility of the budget was sustained. The treasury, therefore, released K15.2 billion in April to finance public service delivery. These announcements were made by the Finance and National Planning Minister, Situmbeko Musokotwane, in a statement issued on Sunday. Musokotwane said the treasury would continue to finance key developmental and social welfare programmes in the intervening period as it awaited the approval of the realigned budget by Parliament. Read more: Zambia Monitor
The European Union (EU) has reportedly allocated €359 million to provide budget support to Zambia’s health and education sectors. Technology and Science Minister, Felix Mutati, said the support was falling under the Multiannual Indicative Programme (MIP) for the period of 2021 to 2027. Meanwhile, it has also announced that it is finalising the mobilisation of €5.1 million emergency support to address the impact of the drought in Zambia. EU Ambassador to Zambia and COMESA, Karolina Stasiak, said in addition, member states were responding with bilateral actions to support Zambia in this difficult situation. Read more: Zambia Monitor
In International News
Global stocks neared record highs on Monday, in a week where inflation figures could make or break expectations for earlier U.S. rate cuts, while Chinese activity data will test optimism about a sustained recovery in the world’s No. 2 economy. While U.S. inflation data will take centre-stage, reports on Chinese retail sales and industrial output could also have a big impact on overall investor sentiment. Chinese authorities are also set to sell 1 trillion yuan ($140 billion) in longer-dated bonds to help fund stimulus spending at home. The improved sentiment has helped lift Chinese blue chips to a seven-month high and the positive vibes carried over into Europe, where the STOXX 600 held near record highs and U.S. stock futures, rose 0.1%. Read more: Reuters
Chinese President Xi Jinping has concluded a five-day tour of Europe, after visiting France, Serbia and Hungary, where he touted Beijing’s vision of a multipolar world and held talks on trade, investments and Russia’s war in Ukraine. In France, President Emmanuel Macron feted Xi with gifts of luxury bottles of cognac and a trip to a childhood haunt in the Pyrenees mountains, while in Serbia, President Aleksandar Vucic organised a grand welcome, gathering a crowd of tens of thousands of people, who chanted “China, China” and waved Chinese flags in front of the Serbian presidential palace. Read more: Al Jazeera
The World Bank is poised to disburse Nigeria a $2.5 billion loan as soon as possible. The nation expects to get the loan shortly after its approval, which could be as soon as June. Given the country’s economic struggles throughout the last year, this loan is meant to help it with its recovery efforts. A report seen in the Nigerian newspaper, The Punch reveals that Nigeria is set to receive a $2.5 billion loan from the World Bank. This loan would be diverted to two major projects, which are the Nigeria Reforms for Economic Stabilization to Enable Transformation Development Policy Financing, which would be serviced with $1.5 billion of the total loan, and the NG Accelerating Resource Mobilization Reforms Programme-for-Results, which would be funded with $750 million. Read more: Business Insider
The International Monetary Fund (IMF) has recommended fiscal tightening for countries in Sub-Saharan Africa, such as Zambia, in a way that meets the country-specific needs while minimising harm to its economy and people. The recommendation followed the rising needs, limited financing options, and borrowing costs remaining high in the region. The Fund in its April Sub-Saharan Regional Economic Outlook proposed specific requirement for the recommended fiscal tightening. According to the Fund, taking immediate steps towards fiscal consolidation may not only be unavoidable but could also strengthen confidence in the region’s adjustment efforts. Read more: Zambia Monitor
