Mopani deal will exacerbate Zambia's debt crisis
Monday, February 1, 2021
Significance
This boosts President Edgar Lungu's re-election prospects in August, but ZCCM-IH will struggle to find a 'strategic partner' to replace Glencore. Mounting public debt will undermine efforts to convince the IMF that the government has a path to debt sustainability, depriving Zambia of access to concessional lending and stalling negotiations with bondholders.
Impacts
- Resource nationalism will play well on the Copperbelt, improving the ruling party’s prospects in a region key to securing a poll victory.
- With little chance of an IMF deal, Lungu will likely make further pre-poll gestures, such as salary increases for public-sector workers.
- Monetary policy is also likely to suffer, with the central bank under pressure to fund the government's reckless borrowing.