Zambian President Urges Fears of a Debt Crisis Are Unfounded
President Edgar Lungu expressed his concerns to the Zambia, whose Eurobonds are trading at distressed levels, that it is able to repay it’s debts and the country will soon emerge from the economic slump it is currently experiencing.
“Zambia is not in a position of a crisis,” the 62-year-old leader said in an interview in Maputo, Mozambique’s capital, on Wednesday. “When you find that you are being strangled by debt, you hold back and see how you can realign your position so that in the end you continue being alive, you don’t suffocate. That’s where we are now.”
President Lungu has urged that his government is trying to revive the economy, which the IMF has insisted is growing at the slowest pace in more than two decades, after a slump in the price of copper over the past year, Zambia’s main export. The drought has also lowered water levels at hydro plants and caused power shortages.
Spreads on Zambia’s dollar bonds hit 2,000 basis points above U.S. Treasuries last month as investors fretted about its ability to pay off debts. It’s the only country in the Bloomberg Barclays Emerging Markets USD Sovereign Bond Index, which includes 75 nations, whose securities have lost money in 2019.
President Lungu who is up for re-election in just two years now, has said his administration had not frozen new loans, it would prioritise concessional borrowing that comes with lower interest rates.
“We have realized where we are and I think we have taken measures,” he said. “Those measures will see us get some breathing space so that the economy begins growing again. In a few years, we will see Zambia boomerang and rise again to that growth rate which is acceptable.”