HH Warns IMF Deal Is Not Feasible Before Elections

United Party for National Development (UPND) Leader Hakainde Hichilema has warned that the government will not be able to secure a debt restructuring deal with the International Monetary Fund (IMF) before Zambia’s general elections in August.

Speaking to Bloomberg News, Hichilema said that “a program before the elections is not feasible”, before warning investors against striking a deal with the famously profligate Patriotic Front government. 

“Why would you throw good money after bad, for heaven’s sake? No-one, who is sane, can do that,” he said. 

The Finance Ministry is currently in talks to secure a deal with the IMF before the general election on August 12. However, with parliament dissolving on May 14, time is incredibly short.

Zambia’s eurobonds are currently trading at less than two-thirds of their face value, after the government officially defaulted on its interest payments in November 2020, becoming the first African country to do so in the pandemic-era. 

Hichilema, a business-man by profession, has said that a deal with the IMF will be possible following the election and that Eurobond holders could expect to exit the restructuring talks with only a 20% loss - far above current projections. 

Zambia’s debts have spiralled out of control since the PF took control in 2014, doubling from $4.8 billion that year to $11.2 billion in 2019.

By September 2020, Zambia’s total foreign debts - including those owned by state entities - reached $18.5 billion; approximately 104% of the country’s GDP.