Zambia Debt Costs Set to Soar After ‘Terribly Wrong’ Budget Call
ByZambia’s plan to plug a gaping budget deficit by more than doubling foreign bond issuance is sending dollar-borrowing costs to five-month highs.
It could get worse, according to Oliver Saasa, a consultant who was briefed about the plan to raise as much as $2 billion in Eurobonds by a Finance Ministry official. The southern African nation may have to pay as much as 10 percent for the new debt, about 2 percentage points higher than yields on existing securities, he said.
Zambia’s finance ministry said last week the deficit would swell to more than 6 percent of gross domestic product, compared with a previous target of 4.6 percent, after the government exceeded budgeted expenditure and reversed a planned increase in mine taxes at a time when low copper prices are crimping revenue. That’s optimistic, according to the International Monetary Fund, which said in a report on Tuesday the shortfall could widen to 7.7 percent even with proposed spending cuts and a government salary freeze…
Zambia Debt Costs Set to Soar After ‘Terribly Wrong’ Budget Call
