12 May 2021 | Economics
Zambia's finance ministry said it had reached a broad agreement with the International Monetary Fund (IMF) on macroeconomic parameters, fiscal targets and policy objectives, during talks to secure a lending programme.
Both Zambia - Africa's first pandemic-era sovereign default - and the IMF said more talks were needed to finalise a programme under the Fund's Extended Credit Facility.
Zambia's debt had been considered unsustainable even before the pandemic struck and missing a coupon payment on a US dollar bond in November tipped it officially into default.
It asked for a financial programme with the IMF late last year. And in January it sought debt relief under the new G20-supported common framework designed to help the world's poorest countries overhaul the debt they owe to official and commercial creditors.
Zambia's external debt includes around US$3 billion in outstanding Eurobonds and another US$3 billion owed to China and Chinese entities. Tensions between those two groups of creditors have so far stymied restructuring efforts. – Nampa/Reuters
Debt relief for Sudan
The International Monetary Fund (IMF) executive board approved a financing plan to help mobilise resources needed for the fund to cover its share of debt relief to Sudan.
The financing plan relies on a broad effort of IMF member countries, including cash grants and contributions derived from the fund's internal resources, IMF managing director Kristalina Georgieva said in a statement.
Sudan, whose transitional civilian government is battling a crippling economic crisis, is seeking relief on at least US$50 billion in external debt to international financial institutions, official bilateral creditors and commercial creditors.
The African nation has already secured bridge loans from the United States and Britain to clear arrears to the World Bank and African Development Bank. About 85% of the debt is in arrears.
Sudan is emerging from decades of economic sanctions and isolation under former president Omar al-Bashir, who was ousted by the military after months of popular protests in April 2019. – Nampa/Reuters
Egypt to cuts to ease cement glut
The Egyptian government has proposed that cement makers cut production by a baseline of 10% to shore up finances ravaged by an expanding market glut, two cement executives and a senior industry source said.
Egyptian cement capacity has risen to an annual 85 million to 87 million tonnes in the last three years following the inauguration of the 13 million tonne-per-annum Beni Seuf plant owned by the military, even as sales fell to less than half that level, according to the executives.
The cement sector, where several international firms established a footing, is seen as an indicator of Egypt's openness to outside investment.
Under the formula proposed last month, each cement maker would cut production by a base amount of 10.52%. They would cut an additional 3.71% for each production line and 0.65% for each year they have been in operation, said one executive.
Annual cement sales fell to 41.7 million tonnes in 2020 from 43.8 million tonnes in 2019, according to central bank statistics. It stood at 49.5 million tonnes in 2017, the last year before Beni Suef went online. Sales last year were hurt by the coronavirus pandemic. – Nampa/Reuters