IMF to Return to Zambia in May for $1.6 Billion Loan Talks

(Bloomberg) -- The International Monetary Fund will send a mission to Zambia in May to continue talks over a loan of as much as $1.6 billion the government is seeking after they failed to reach a deal in Washington this month.

“Progress was made but program discussions have not yet been concluded,” Alfredo Baldini, the fund’s representative in Zambia, said Friday in response to emailed questions. “The authorities and IMF staff have agreed that a mission will return to Zambia at the end of May to continue the discussions.”

Finance Minister Felix Mutati had hoped to strike the loan deal to boost Zambia’s foreign exchange reserves while in Washington for the IMF and World Bank Spring Meetings. The government first signaled its intentions to sign a deal in 2014 but has faced a number of delays since. Chileshe Kandeta, a spokesman for the Finance Ministry, didn’t answer two calls to his mobile phone seeking comment.

Africa’s second-biggest copper producer has struggled with ballooning budget deficits in recent years as metal prices fell and government spending grew. A power crisis worsened the situation as government paid hundreds of million of dollars for electricity imports, while economic growth fell to the lowest since 1998.

Yields on Zambia’s $1 billion Eurobonds due April 2014 fell five basis points to 7.59 by 4:16 p.m. in London, the lowest since March 22.