A Quick Look at Zambia's $6.7bn External Debt Stock

The Minister of Finance recently revealed that the Government was looking to refinance the Eurobond portion of the external debt ($6.7bn as of September 2016) stock with a view to securing new long-term debt with lower interest rates. This also came up last year as the Treasury Secretary talked about various options that the Government was exploring with respect to external debt. 
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Zambia's vast economic and social needs have seen the commercial portion of its debt holdings ramped up significantly over the last 4 years through 3 Eurobond auctions. The lowest coupon being paid is on Eurobond 1 at 5.375% (2012) and the highest is Eurobond 3 (2015) at 8.97%. Annual interest costs have risen by over 12x from 2011 ($13.7m) to 2015 ($172.6m):
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The slowdown in economic growth which was triggered by the current energy deficit and 2015 currency decline means that Zambia could potentially have 3 to 4 years in a row of tepid growth -- adversely impacting tax revenue mobilization. $750 million of Eurobond debt is due in about 6 years with an additional $2.25 billion due within 3 years of that -- this could cause huge challenges ahead if tax revenue/economic growth remain at current levels. And in this time period, the Government will still have enormous challenges in energy, infrastructure and human capital skill to address.

In theory, it makes sense for the Minister to consider refinancing as a strategy to increase financial flexibility but where will he able to source funds at a rate similar or close to 5.375% (i.e. Eurobond 1 as benchmark) with fiscal performance and ratings like these:

In September this year, Ghana, a country in a comparable economic/fiscal position to Zambia issued a $1 billion Eurobond with a coupon of 10.75% -- this, is at best, what Zambia could expect by going this route. This leaves either China or Multilateral partners like the World Bank/IMF -- all of which will come with their own "strings". So unless the Fin. Minister has an ace (or two) up his sleeves, it will be more prudent to focus on clamping down on Government wastage, revenue mobilization and stimulating local businesses with a view to gradually building up credit ratings which will eventually achieve his ultimate goal (without handcuffs from elections).