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Zambia: IMF releases $187 million after its second review 

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Following the conclusion of its second review of Zambia’s Extended Credit Facility (ECF), the Executive Board of the International Monetary Fund (IMF) has disbursed roughly US$187 million to the southern African country.

The programme will continue until October 2025, and performance reviews will occur every six months. The next evaluation is planned for April 2025.

This action comes after the first review was approved in July 2023, and about US$188 million was disbursed. Out of the total amount of US$1.3 billion anticipated under the 38-month ECF programme with the IMF, approved on August 31, 2022, the total disbursements made thus far are US$561 million.

The ECF funds have an extended grace period and 0% interest. It is conditioned upon domestic economic reforms implemented by the Zambian government in an effort to achieve debt and budgetary sustainability, boost inclusive, robust, and higher growth, and restore macroeconomic stability.

In response to the development, Dr. Situmbeko Musokotwane, Minister of Finance and National Planning, praised the multilateral body’s decision and highlighted the nation’s economic resilience in the face of significant adversity.

 

Thanking all contributors to keeping the economic transformation process moving forward, he also acknowledged the progress made in terms of growth, fiscal performance, and ongoing debt restructuring negotiations with creditors.

The minister reaffirmed the government’s dedication to achieving the goals of the ECF programme and urged people worldwide to continue lending support. He acknowledged the need for strict reform measures and emphasised their critical role in improving livelihoods in all regions, fostering the growth of the private sector, and creating jobs.

Obstacles in mining, construction, and agriculture hindered its post-pandemic recovery after the economy contracted by 2.8% in 2020. It, however, recovered in 2021, with real GDP growing by 4.6%. Zambia was the first African country to default on its foreign debt following the COVID-19 pandemic. It has continued to seek debt restructuring with creditors under the G20 framework.

The IMF loan could be considered an endorsement of the government’s recent economic reforms and a positive for investors’ confidence in Zambia’s copper-dominated economy.

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Nigeria’s Petroleum Regulator begins bidding round for 12 oil blocks

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The Nigerian Upstream Petroleum Regulatory Commission has announced the start of the bidding process for 12 oil blocks recently put up for sale. It also marks the beginning of the 2024 Nigeria Petroleum Licensing Round and the continuation of the 2022/2023 mini-bid round.

This was stated in a press release issued by the commission’s CEO, Gbenga Komolafe, on Monday in Abuja. Last month, the commission made the first announcement about the bidding process.

It also waived the signing bonus requirement throughout the bidding process to entice investors to bid on the auctioned oil blocks.

He said, “On behalf of the Federal Government of Nigeria, the Nigerian Upstream Petroleum Regulatory Commission is pleased to announce the commencement of the 2024 Petroleum Licensing Round.”

On the number of blocks for the offer, Komolafe noted, “We have identified 12 blocks that cut across deep offshore, shallow water and onshore terrains to be made available to interested investors.”

According to him, this licensing round represents a key milestone in our commitment to supporting long-term growth and innovation in the energy sector, as well as creating economic prospects for investment to stimulate new exploration and development activities in our petroleum landscape.

He explained that the 2024 Licensing Round will provide an opportunity for domestic and foreign parties to participate in the exploration and development of Nigeria’s hydrocarbon resources. He emphasized that having access to high-quality geological and geophysical data is important to this approach.

Komolafe stated that the National Data Repository of NUPRC, in partnership with multi-client partners, is committed to providing prospective bidders with access to broad and strong datasets to help them make better decisions.

Commenting on the 12-block offer, he stated that it is consistent with the licensing round’s objectives and includes a varied range of exploratory possibilities and discoveries with varying technical and operational preferences.

Komolafe added, “Our goal for this licensing round is to harness innovative exploration techniques and foster partnerships that will enhance our production capabilities and ensure environmental sustainability.

“We anticipate that this initiative will not only expand our operations but also significantly contribute to the global energy supply, aligning with international energy security goals.”

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Ecobank’s $183 million impairment losses highlight hazards in sovereign bonds

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Ecobank, a pan-African banking group, has more than doubled its impairment losses on Ghana’s problematic Eurobonds to $183 million, highlighting the extent of risk that African lenders face when investing in state bonds.

The Lome-based lender also stated that it had removed around $39 million in interest income collected on the $13 billion Ghanaian Eurobonds from its 2023 financial statements due to continuing and yet-to-be-completed restructuring discussions with commercial bondholders.

The latest impairment losses represent a 144%  increase from $75 million in 2022.

“As of year-end 2023, the total impairment charges on Government of Ghana Eurobonds are estimated at $183 million, a significant rise from $75 million in year-end 2022,” the lender says in its audited financial statement for 2023.

“Additionally, $26 million of modification losses were incurred on the GoG debt net of impairment charge releases due to the final settlement of the old bonds for the new bonds in February under the Domestic Debt Exchange Programme.

Ecobank operates in 35 African nations, including Kenya, Burundi, the Democratic Republic of the Congo, Ethiopia, Ghana, and Cote d’Ivoire. Moody’s Investor Service, a global rating organization, has previously urged banks against excessive lending to governments, warning that their credit profiles risk being lowered alongside those of governments facing liquidity constraints.

Zambia secured an agreement with its creditors in March to restructure $3.5 billion Eurobonds, bringing respite to Lusaka, which has been grappling with a long-running debt problem. As part of the agreement, bondholders agreed to extend payment dates, allowing Lusaka to continue receiving funding from a $1.3 billion International Monetary Fund (IMF) project.

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