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Zambia Seeks IMF Deal of as Much as $1.6 Billion This Month

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Zambian economy
  • Zambia Seeks IMF Deal of as Much as $1.6 Billion This Month

Zambia, Africa’s second-largest copper producer, plans to reach an aid deal for as much as $1.6 billion with the International Monetary Fund by the end of April, Finance Minister Felix Mutati said. Bond yields fell.

“At the moment we know that we can get up to $1.6 billion — if you ask me, I’d go for the maximum,” he said in an interview Monday in the capital, Lusaka. “Hopefully the program can be presented to the board sometime end of June, beginning of July.”

The country has been talking about getting IMF aid since 2014, but resisted after two presidential elections since then made the required reforms politically unattractive. The country’s fiscal deficit has risen, foreign-exchange reserves have declined, and economic growth is near the lowest since 1998, spurring the need for a program with the fund.

Zambia’s debt has also been climbing, putting pressure on the Treasury. External debt has increased to $6.9 billion, said Mutati, who President Edgar Lungu appointed finance minister in September. That’s more than double the level in 2012. Total government debt is about $10 billion, which is “pretty high,” he said.

The last election took place in October, with Hakainde Hichilema, the leader of the main opposition party, refusing to recognize the result. He was charged with treason last week for failing to move off the road for President Edgar Lungu’s motorcade. Hichilema was last arrested in October over allegations of unlawful assembly and says he’s been detained at least 16 times in the past five years.

“Although this development is concerning, we do not see the latest incident as delaying IMF discussions,” Irmgard Erasmus, an economist at Paarl, South Africa-based NKC African Economics, said in an emailed response to questions. “Our baseline view is still that Zambia will agree to a program of around $1.3 billion as pressure on the fiscal position and balance of payments remain elevated.”

Bond Issuance

The government has sold $3 billion in Eurobonds, the most recent being $1.25 billion in 2015. It is “not in a hurry” to issue another, and won’t do so this year, said Mutati.

Yields on the country’s three dollar bonds fell, with the rate on the $1 billion of debt due in April 2024 declining 11 basis points, the most since April 5, to 7.95 percent by 12:34 p.m. in Lusaka.

Zambia still needs to clarify to the Washington-based lender how it will pay off about $1.8 billion the government owes in arrears, Mutati said in his office. He spoke before flying to the U.S. to attend the IMF and World Bank Spring Meetings that begin April 21.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Crude Oil

Oil Prices Slide as U.S. Crude Stockpiles Surge, Heightening Demand Concerns

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Crude oil

Oil prices declined on Thursday as concerns over demand intensified due to a larger-than-anticipated build in U.S. crude stockpiles.

Brent crude oil, against which Nigerian oil is priced, dropped by 0.5% to $83.25 a barrel while U.S. West Texas Intermediate crude oil fell by 0.3% to $78.28 a barrel.

The Energy Information Administration’s report revealed a substantial increase in U.S. crude oil stockpiles by 4.2 million barrels to 447.2 million barrels for the week ending February 23rd.

This surge surpassed analysts’ expectations and marked the fifth consecutive week of rising inventories.

While gasoline and distillate inventories witnessed a decline, concerns regarding a sluggish economy and reduced oil demand in the U.S. were amplified.

Satoru Yoshida, a commodity analyst with Rakuten Securities, highlighted that the significant stockpiles have heightened investor worries.

Moreover, the anticipation of delayed U.S. interest rate cuts further weighed on market sentiment, potentially undermining oil demand.

Traders have adjusted their expectations for rate cuts, with an easing cycle predicted to commence in June rather than March as previously anticipated.

Market participants await the U.S. personal consumption expenditures price index for insights into inflation trends, while the possibility of an extension of voluntary oil output cuts from OPEC+ looms over price dynamics, amid lingering uncertainty in the demand outlook and geopolitical tensions in the Middle East.

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Crude Oil

Crude Oil Shortage Threatens Dangote, Government Refineries, Minister Raises Alarm

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Dangote Refinery

The Minister of State for Petroleum Resources (Oil), Heineken Lokpobiri, has sounded a clarion call over a looming crude oil shortage that threatens the operations of the newly inaugurated Dangote Petrochemical Refinery and government-owned refineries in Nigeria.

Addressing stakeholders at the seventh edition of the Nigeria International Energy Summit in Abuja, Minister Lokpobiri expressed concerns that unless deliberate efforts are made to increase investments and crude oil production, these refineries may struggle to obtain enough feedstock for petroleum product manufacturing.

The Dangote refinery, a colossal project spearheaded by Dangote Industries Limited, has a daily requirement of up to 650,000 barrels of crude oil, while government-owned refineries could need approximately 400,000 barrels.

However, the current pace of crude oil production and investment in Nigeria falls short of meeting these demands.

Minister Lokpobiri highlighted the need to ramp up production and attract investments in the upstream sector to ensure adequate feedstock supply for the refineries.

He emphasized the importance of efficiently utilizing Nigeria’s abundant oil and gas reserves to enhance domestic energy security and economic prosperity.

Furthermore, the minister underscored the significance of investing in energy infrastructure and transitioning towards more environmentally friendly practices to address Nigeria’s energy needs effectively.

The alarm raised by Minister Lokpobiri underscores the urgency for strategic interventions and collaborative efforts to mitigate the impending crude oil shortage and secure the future of Nigeria’s refining industry amidst evolving global energy dynamics.

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Energy

NNPCL Pledges End to Nigeria’s Energy Scarcity Within a Decade

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Mele Kyari - Investors King

The Nigerian National Petroleum Company Limited (NNPCL) has announced a bold initiative aimed at ending Nigeria’s persistent energy scarcity within the next decade.

Mele Kyari, the Group Chief Executive Officer of NNPCL, revealed this ambitious plan during the opening ceremony of the seventh Nigerian International Energy Summit in Abuja.

Kyari’s announcement comes as a beacon of hope for millions of Nigerians grappling with chronic power shortages and energy deficiencies.

In his statement, Kyari expressed confidence that all issues related to energy scarcity in the country would be resolved within the next 10 years.

Assuring stakeholders of NNPCL’s unwavering commitment, Kyari emphasized the company’s dedication to collaborating with partners to bridge the energy deficit gap and foster prosperity for all Nigerians.

He highlighted NNPCL’s pivotal role as a key partner to oil-producing companies in Nigeria, facilitating the divestment of international oil companies from onshore and shallow water assets in the country.

Furthermore, Kyari underscored NNPCL’s statutory mandate as the enabler of national energy security, emphasizing the importance of sustainable production from divested assets to ensure energy security for Nigerians.

In addition to addressing domestic energy challenges, NNPCL is also exploring avenues for sustainable energy investment across Africa.

Kyari revealed the company’s intention to invest in the proposed African Energy Bank, aiming to secure funding for energy projects on the continent and guarantee regional energy security.

The event, attended by prominent stakeholders including government officials and representatives from international organizations, marks a significant step towards reshaping Nigeria’s energy landscape and fostering economic development through improved energy access.

As NNPCL charts its course towards energy abundance, Nigerians remain cautiously optimistic about the prospects of a brighter energy future.

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