Zambia seeks credit ratings to sell bonds in international markets


Jul. 11, 2006 (Xinhua News Agency delivered by Newstex) -- Zambia seeks credit ratings to sell bonds in international markets

LUSAKA, July 11 (Xinhua) -- Zambia will seek the first credit ratings to enable it to become the third southern African country to sell bonds in international markets, governor of the central bank of the country has said.

The Post Tuesday quoted Caleb Fundanga, the governor of the Bank of Zambia, as saying in Lusaka that "we have to go that route we've done enough work and I think we are sufficiently credible in terms of track record and policy."

"If we went for a rating, we'd be able to issue a euro-kwacha bond for example," he said recently.

After the country reached the Highly Indebted Poor Countries ( HIPC) initiative completion point in April 2005 its foreign debt have been gradually reduced to 502 million U.S. dollars from the 7. 2 billion dollars in 2004. A total of 400 million dollars in repayments may be saved over the next three years.

Zambia's inflation rate dropped to single digit in April this year for the first time in 30 years as the government moved to control spending. The copper-producing country has benefited from a fivefold rise in the copper price in the international market over the past four years.

Its average income per head stood at 352 dollars in 2005, when the economy increased by 5.1 percent. The government wants to cut its funding costs to make money available for the road construction and schools and hospitals.

"With all the debt canceled, a buoyant economy and a good track record, I thin it's about the right time to subject ourselves to a rating," said Fundanga.

"Zambia is clearly one of the countries where the impact of debt relief has been massive and could be very clear," said Ohene Nyanin, country manager based in Lusaka of the World Bank.

The economy should grow by 6 percent in 2007 and by "at least seven percent thereafter," Fundanga predicted.

The country will probably seek its debut rating shortly and there has never been a better time than this, the governor said.

South Africa and Botswana are the only southern African countries with foreign currency denominated bonds. Zambia's economy accounts for about one percent of sub-Saharan Africa's 544 billion dollars economy.

Newstex ID: XIN-0001-9556610

This is all based on the current high copper price. This is unsustainable as the price as itdidinto the 1970's willfall. Also those benefiting from thisare not the majority of Zambiansbuttheforeign companies that own and operate the mines. Miners and communities are worse off under this copper boom then they were during the period after independence. The privatisation of Zambian mines came with massive job losses, leaving most former miners in the mineral-rich Copperbelt region desperate. ZCCM the now privatised former state run mining company provided clinics and schools, and a football team. The real tragedy is no matter what figures are given for growth rates and economic performance a lot of ordinary Zambians do not have access to this boom. It's boom time for white citizens of Countries that once bombed Zambia in the struggle (white South Africans and Zimbabweans) and of course the Chinese.