Investors buy Zambian bonds after President fires finance minister
Bwalya Ng’andu has been sworn in as Zambia’s new finance minister, a day after Margaret Mwanakatwe was fired from the post. Ng’andu who is 64, is a former deputy governor of Zambia’s central bank, and the third person to hold this post in three years. He was sworn in at a ceremony at the presidency in the capital, Lusaka.
Ng’andu’s appointment comes as the government tries to revive an economy that the IMF says is growing at the slowest pace for more than two decades, after a slump in the price of copper, Zambia’s main export. A drought is causing power shortages and an escalating dispute with copper producers isn’t helping either.
The incoming finance minister will need to soothe investor concerns that Zambia may default on its debts unless it get s a bailout from the IMF or negotiates easier terms on loans it obtained from China.
He’ll also have to rein in the government’s ballooning budget deficit, possibly with spending cuts. The shortfall in the fist quarter was 4.8 billion Kwacha ($383 million), 12% higher than the Finance Ministry’s forecast. The ministry has a deficit target of 6.5% of gross domestic product this year, compared with 10% last year.
The price of Zambia’s dollar bonds due in September 2022 rose 1.7%, the most since June 20, to 66.9 cents on the dollar, equating to a yield of 19.9%.
“He comes from a banking setup, so he understands a lot more about the actual realities of the Zambian economy,” said Chibamba Kanyama, a Lusaka based independent economist. “He is not a politician and by virtue of him not being a politician, I am sure he will rein in colleagues. I am very sure that he will succeed if he focuses on the fiscal macro economic stabalization and also and do away with sales tax.”
“We are very encouraged by the appointment of the new finance minister, who is a technocrat,” Barrick Gold Corp. Chief Executive Officer Mark Bristow told reporters in Lusaka on Monday.
Reporting originally by Bloomberg