Zambia’s finance minister on Friday said the country would not take on new external commercial loans in 2021 and limit existing projects in a bid to reduce spiralling debt.
The mineral-rich southern African country’s public debt increased by 4.3 percent in the first six months of 2020, reaching $11.97 billion (10.3 billion euros) in June.
That debt already represented around 80 percent of GDP by the end of 2019, according to the African Development Bank (AfDB).
“Government remains committed to restoring public debt sustainability and has embarked on a number of initiatives to achieve this objective,” Finance Minister Bwalya Ng’andu announced in a 2021 budget presentation.
“These include cancellation, postponement and re-scoping of projects. Further contraction of new commercial external debt has been stopped,” he added.
Ng’andu said $1.1 billion (947 million euros) in pending loans had been cancelled and another $280 million (241 million euros) saved through project changes.
He reiterated that the government plans to apply for a G20 initiative to suspend debt servicing and said similar relief was being sought from external commercial creditors.
Earlier this week, government asked for a six-month debt repayment holiday on three Eurobonds due to the economic impact of coronavirus restrictions.
As Africa’s second largest copper producer, Zambia has also been hit by a global decline in metal prices.
Its mining revenue dropped nearly a third between February and April 2020 due to the pandemic.
Global giant Glencore — one of Zambia’s largest miners — announced earlier this year that it would cut capital expenditure by as much as a quarter during 2020 due to disruption to supply chains caused by coronavirus and falling commodity prices.
The government has since proposed to up its 10 percent shareholding in Glencore subsidiary Mopani Copper Mines (MCM) to save jobs.
Ng’andu said the government had “offered to acquire additional shares” in MCM and “terms of purchase” were being negotiated with Glencore.
Zambia has previously defaulted on loans acquired for several construction projects, including Chinese-funded ones, resulting in some being suspended or abandoned.
Zambia’s President Edgar Lungu has requested debt relief and cancellation from China due to the economic impact of the coronavirus pandemic, his office said.
Lungu made the appeal in a telephone call with his Chinese counterpart Xi Jinping on Monday.
“President Lungu called for debt relief and cancellation in light of reduced revenue due to the negative impact of the pandemic, as well as competing needs for the country, to secure adequate resources to fight the pandemic and to stimulate the economy,” the presidency said in a statement released late Monday.
Africa’s second largest copper producer is one of China’s prominent debtors, owing billions of dollars.
“Chinese project finance loans to Zambia amount to between US$6 billion and US$9 billion, based on unofficial sources,” said Robert Besseling, director of risk assessment firm EXX Africa.
“However not all the funds have been disbursed, while the Zambian government itself has been unable to account for its obligations to China. An official audit has been withheld for several years,” he said.
Zambia’s external debt is projected to soar above 60 percent of GDP this year.
The International Monetary Fund (IMF) last week predicted that Zambia’s economy will contract by five percent in 2020, compared to growth of 1.5 percent posted last year, due to the coronavirus pandemic and severe drought.
To date the country has recorded 2,980 coronavirus cases, including 120 deaths.
EXX Africa expects Zambia’s debt rating to “deteriorate significantly in 2020” and says it will remain “one of Africa’s worst country risk performers in the year ahead”.
“Zambia’s sovereign has been unable to maintain payments on various loan agreements and contractor commitments over the course of 2019,” said Besseling.
Mining revenue dropped nearly a third between February and April this year due to the coronavirus pandemic, according to the country’s mining chamber.
Nearly half of the country’s tax revenues goes towards debt servicing.
Zambia’s President Edgar Lungu on Thursday announced the immediate reopening of all three of the landlocked country’s international airports to help revitalise the tourism sector hit hard by the coronavirus pandemic.
Lungu said decreased economic activity since the start of April caused a loss in revenues of 20.8 billion kwachas ($1.1 billion).
He announced the reopening of the three international airports with “immediate” effect to help boost earnings, adding: “In the tourism sector… we have also got to get back to work.”
Zambia’s tourism industry — with the stunning Victoria Falls as its flagship attraction — contributed $1.8 billion to the national economy in 2018, according to data by the World Travel and Tourism Council.
Lungu directed the ministers of communication, finance, home affairs and tourism to work together to devise stringent health guidelines for arriving tourists.
Over the last 24 hours, Zambia recorded eight new coronavirus cases, for a total of 1,497 with 18 deaths. The number of recoveries now stands at 1,223.
The president urged Zambia’s more than 17 million citizens to observe high standards of hygiene as the winter season peaks in the southern hemisphere, warning that the numbers of coronavirus cases in Zambia could soar.
The spectre of want is haunting Zimbabwe, Zambia and South Africa as they grapple with a long and devastating drought.
AFP reporters who travelled across the three countries saw widespread suffering in rural areas where successive harvests have been hit by lack of rain or shortened rainfall seasons.
Across the 16-nation southern African region, 45 million people are “gravely food insecure,” the World Food Programme (WFP) said on January 16. In some regions, the drought is three years old — in others, five.
In the Zambian village of Simumbwe, hundreds waited for food to be distributed by the NGO World Vision and the UN.
“The children ask me: ‘What are we going to eat?'” said Loveness Haneumba, a mother of five.
“I answer: ‘Just wait. Let me look around’.”
A teacher, Teddy Siafweba, said about 15 children in his class were absent that day because of hunger. In the classroom next door, about 30 were missing — nearly half of the rollcall of 70.
In South Africa’s Northern Cape province, at the gateway of the Kalahari desert, the wild animals are used to extreme temperatures but even they are succumbing to the conditions.
According to Wildlife Ranching South Africa, two-thirds of wild animals in the province have died in the last three years.
In two years, half of the 4,500 buffaloes, hippopotamuses and kudus at the Thuru Lodge game farm near Groblershoop have disappeared.
The average rainfall here is 250 millimetres (one inch) a year.
“But 250 millimetres, that’s what we have had in five years,” said its manager, Burger Schoeman.
At the top of a hill that overlooked the 22,000-hectare (54,000-acre) private reserve, two huge holes served as mass graves.
The drought represents a financial black hole for the lodge, which spends 200,000 rand (12,000 euros) per month to feed the animals while cancelling the reservations of tourists on the lookout for “trophies.”
“We need to offer a fair hunt. Hunters can’t shoot weak animals,” said Schoeman.
Johan Steenkamp, a 52-year-old farmer with a spread of 6,000 hectares, said he had lost up to 70 percent of his stock.
Sheep still give birth, but they abandon their newborn lambs.
“They have no milk,” Steenkamp said. “They leave them there.”
Hand-in-hand with the desperation are signs of hope as some farmers adapt to climate shock.
Three years ago, Imelda Hicoombolwa, a single Zambian mother and small farmer, gambled on agricultural diversification, opting for nutritious vegetables and using techniques adapted to climate change.
“Food is not a problem. I have it,” she beamed.
Before 2017, Hicoombolwa cultivated almost only maize. Today, she harvests cowpeas, which need very little water, as well as peanuts, pumpkins and sunflowers.
“I can make 18,000 kwacha (1,100 euros, $1,222) a year. Before, I was making 8,000 kwacha a year,” she said. “Before, the children were missing school because I could not always pay the tuition fees. Not any more.”
Zambian President Edgar Lungu cut his salary and those of senior cabinet ministers Friday, as higher electricity and fuel prices take effect, his office said.
The price of petrol gained 10 percent to 17.62 kwacha ($1.27) per litre on Thursday, while that for diesel fuel rose by 9.6 percent to 15.59 kwacha.
The cost of electricity is to soar by 115 per cent starting January 1.
The stiff hikes for electricity and fuel have sparked an uproar on social media where many Zambians vented their anger.
The cut in the president’s salary and those of senior ministers is in the range of 15 to 20 per cent.
“The money realised will go into cushioning the impact on the vulnerable in society. The money realised from this decision will go towards ameliorating the impact that the increase would have brought on the masses,” Lungu’s press aide Isaac Chipampe said in a statement.
Lungu said he was aware of the suffering that the Zambians were going through as a result of the tariff hikes but expressed confidence that the economy would rebound in 2020 owing to measures that the government has put in place.
They include reducing travel by senior government officials.
Zambian President Edgar Lungu wants the US to recall its ambassador to Lusaka for criticising the southern African nation over a 15-year jail term slapped on two gay men for consensual sex.
Daniel Foote came under fire in Zambia after he expressed horror over the high court ruling late last month and urged Lusaka to review laws that discriminate against minority groups.
“You need to know that we have complained officially to the American government and we are waiting for their response because we don’t want such people in our midst,” Lungu said in comments on state-owned radio.
His press aide Isaac Chipampe late on Sunday said the protest letter Lungu was referring was the same one issued by Foreign Minister Joseph Malanji.
“The government is still waiting for a response from the United States government concerning the complaint,” said Chipampe.
Foote had told a news conference that Zambia, which relies on overseas aid, wanted diplomats “with open pocketbooks and closed mouths.”
Homosexuality is outlawed in the southern African country which also faces a high HIV burden.
Over the last 15 years, the US has provided more than $4 billion (3.6 billion euros) to fight HIV/AIDS in Zambia.