The IMF support has been put on hold until after the August 12 elections which invariably brings the country’s debt restructuring to a pause.
According to reports, Zambia owes in excess of $12 billion to external creditors and spends up to 30%-40% of its revenues covering the interest payments on its debt, credit rating firm S&P Global estimates. Its debt-to-GDP ratio was near 120% last year, making it one of the highest in emerging markets and most likely double what is considered manageable.
In May, Zambia said it had reached a broad agreement with the IMF on macroeconomic and fiscal targets and policy issues during talks to secure lending, setting the stage for what investors hope will be a post-election deal.
However, the IMF expects the economy to be among the weakest in Africa this year, with Gross Domestic Product set to grow only 0.6% after a 3.5% contraction last year.
Investors are closely looking out for the upcoming election in Zambia on August 12. The country which is known for its copper production is recognized as the continent’s first pandemic-era sovereign default in November.
President Edgar Lungu who assumed power in 2015 has been in a tight contest with opposition candidate, Hakainde Hichilema, a business mogul who has incessantly criticized the incumbent’s economic management.
