LUSAKA (AFP) – Zambia’s currency is on track for a world-beating year as investors bet on the new government’s chances of securing a bailout deal with the International Monetary Fund and negotiating a debt restructuring.
The kwacha has advanced 27 percent against the dollar this year, largely on the back of optimism over the August election victory of Hakainde Hichilema.
That’s the currency’s best annual performance since 2005, and only the Seychelles rupee has fared better this year.
Both were among the three worst performers in 2020.
Zambian President Hichilema’s government is trying to rework as much as $17 billion in external public debt.
He needs the IMF’s endorsement to advance talks with creditors ranging from holders of $3 billion in Eurobonds to $5.8 billion owed to China.
Finance Minister Situmbeko Musokotwane plans to conclude negotiations by the middle of 2022.
The country became Africa’s first pandemic-era sovereign defaulter last year, and hasn’t serviced most dollar debt since.
The currency of Africa’s second-biggest copper producer has also been buoyed by near-record prices for the metal, which makes up more than 70 percent of export earnings and helped boost the 2021 trade surplus to 73,4 billion kwacha ($4,4 billion) through November, compared with 41,8 billion kwacha a year earlier. —AFP.