Poll will pose short-term hurdle for Zambia's IMF deal

Subject

Outlook for Zambia's IMF programme.

Significance

The World Bank in its most recent report expects Zambia's GDP growth to slow to 3.4% this year from 3.6% in 2015. The slowdown is symptomatic of an array of macroeconomic challenges -- including low commodity prices, drought, currency volatility, high inflation, fiscal and current account deficits and rising debt burdens -- that have driven the Patriotic Front (PF) government to seek assistance from the IMF.

Impacts

• Glencore's plans to invest 1.1 billion dollars in its Mopani mine will extend the asset's life, possibly by up to 25 years.
• The new variable mining tax system, in which tax rates rise and fall depending on global metals prices, will improve investor confidence.
• The substantial power deficit will persist due to the drought, which is depressing hydroelectricity output, and dilapidated facilities.
• Recent investments in renewables capacity -- in particular, solar power -- will prove insufficient to mitigate electricity shortages.