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World Debt crisis to overshadow Zambia's high stakes election

14:31  24 october  2020
14:31  24 october  2020 Source:   msn.com

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Zambia is heading for the polls just 18 months after the last presidential election , which saw Edgar Lungu win by less than 28,000 votes. The government is now seeking an International Monetary Fund bailout due to its rising debt . The cost of living for many Zambians is at an all-time high .

Lusaka - Zambia : By Chibamba Kanyama Over a lunch discussion with the IMF Mission Chief to Zambia Tsidi Tsikata when I was still at the Fund, I The nominal value debt -to-GDP is higher than the 60 percent threshold given that even the face value is way above the same ratio. This surely is of

Although elections won't be held in Zambia for another 10 months, the battle lines already being drawn over the country's debt woes could make them the issue to topple the longtime incumbent.

Hakainde Hichilema standing in front of a crowd: Self-made businessman Hakainde Hichilema has bid for the presidency five times already © SALIM DAWOOD Self-made businessman Hakainde Hichilema has bid for the presidency five times already

Presidential and parliamentary polls on August 12, 2021 will mark the sixth attempt by opposition leader Hakainde Hichilema, 58, to claim the top job.

Meanwhile 63-year-old Edgar Lungu hopes to hang on to the presidency he has held since 2015, even as the global coronavirus pandemic hammers the commodity prices that prop up Zambia's mining-heavy economy.

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This shall make the debt position far worse than anything imaginable for Zambia . What is clear from all the information available is that Zambia is sitting on a massive debt time They rig elections just to put the country in this situation. PF these are crimes against humanity and people will demand answers.

Zambia last month secured an eight-month debt freeze from some official lenders under the Group of 20 debt -suspension initiative launched in April. But other countries will watch how the market reacts to Zambia ’ s approach, with the region’s borrowing costs already perceived to be unfairly high .

Edgar Lungu wearing a suit and tie: Edgar Chagwa Lungu has been president of Zambia since 2015 © TIMOTHY A. CLARY Edgar Chagwa Lungu has been president of Zambia since 2015

The presidential contenders have already begun trading barbs in the run up to elections.

But "there are more substantive campaign issues that are likely to weigh heavily on the electoral scale of considerations of many Zambians," said University of Zambia political expert Sishuwa Sishuwa.

"Top of the pile is the faltering state of the economy, worsened by a crippling public debt."

Copper-rich Zambia has seen its external debt surge to nearly $12 billion this year-- around 80 percent of GDP.

Just this week, ratings agency Standard & Poor's declared Lusaka in default after the government missed an interest payment.

The government had last month already asked to defer interest payments on three commercial eurobonds worth $3 billion until April next year -- just four months before the ballot.

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Zambian President Edgar Lungu said the southern African nation, whose Eurobonds are trading at distressed levels, is able to repay its debts and will soon emerge from an economic slump. “ Zambia is not in a position of a crisis ,” the

Lusaka - Zambia : Former Bank of Zambia Governor Dr Caleb Fundanga has stated that the country’ s public debt has now reached crisis levels. However, recent debt sustainability analysis conducted by the IMF and the World Bank indicate that Zambia has a high risk of external debt distress

Paying down the debt has grown harder as the country's kwacha currency has fallen around 30 percent against the dollar since the start of the year.

Low demand for copper has pressured global prices, with knock-on effects for Zambia's mining industry, its top export earner.


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The International Monetary Fund projects Zambia's economy to contract by 4.8 percent this year.

Nevertheless, analysts expect Lungu will again resort "to his tried and tested playbook of exploiting the mining industry for quick cash injections" for his re-election campaign, said Ed Hobey-Hamsher of the Verisk Maplecroft risk advisory.

- 'We are in trouble' -

For now, ordinary Zambians are bearing the brunt of the weakening kwacha, which pushed inflation up to 16 percent in September.

"Most people don't have money currently," said Rebecca Nkhoma, a clothes seller and one of those feeling the pinch.

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Lusaka - Zambia : Mr Simumba said there is need for government to carry out a detailed expenditure review and impose strict value for money test criteria before. International Trade Consultant Trevor Simumba has warned that Zambia is in a debt crisis and that 2018 will be a real struggle given the

Zambia Debt and Poverty examines the origins of Zambia ' s debt and the circumstances of the break with the International Monetary Fund from the particular perspective of the poor of Zambia . The authors discuss the crisis in terms of its human costs and describe what some of Oxfam's partners are doing

Nor has the crisis spared big manufacturers and retailers.

"At the moment, I think we are in trouble," said Yusuf Dodia, chairman of the Private Sector Development Association, questioning how Zambia finds itself with the "highest foreign debt and domestic debt in the history of our nation" as it marks 56 years after independence from Britain Saturday.

After suffering a narrow defeat in the 2016 election, Hichilema is pinning his hopes on disenchantment with Lungu's administration of the economy to clinch the presidency.

"The poor economic situation should benefit the opposition as it adds to its critique of the government's economic policy," said Mark Bohlund of REDD research and advisory services.

After losing five elections between 2006 and 2016, Hichilema has vowed to step down as leader of his United Party for National Development (UPND) if he fails again next year.

Known by his supporters as HH, Hichilema is a self-made entrepreneur who has become one of the country's richest businessmen with interests in finance, ranching, property, healthcare and tourism.

Recently, former finance minister and now leader of opposition party Forum for Democracy and Development Edith Nawakwi accused him of theft from the sale of state institutions two decades ago.

Hichilema has maintained his innocence, while some observers believe Nawakwi's party, widely seen as pro-Lungu, has been enlisted in a scheme aimed to discredit the strongest opposition contender.

The allegations enable "Lungu to deflect public attention from growing criticism of corruption in his inner circle and government," Sishuwa said.

"It is also a strategy aimed at potentially excluding Hichilema, who poses the most credible threat to the incumbent's chance of victory, from the ballot".

"These people are dead scared of me and their plan is to eliminate me from the election next year," Hichilema told AFP.

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