GOVT CANCELS LOANS
indefinitely postpone the contraction of all pipeline debt until the debt is brought back to moderate risk of distress; cancel some of the current contracted loans that are yet to be disbursed to reduce the debt service outlays; undertake refinancing on selected bilateral loans, both local and external, to extend the maturity profile and attain lower costs on debt; carry out an asset liability management exercise on the debt to ensure sustainability of cash flows; cease issuance of guarantees to commercially viable projects; and, cease the issuance of letters of credit and guarantees to state owned enterprises that are technically insolvent until their balance sheet challenges are resolved. Government, she said, was taking measures to improve the country’s foreign debt which stands at US$ 9.3 billion as at March 31, 2018 from US $8.7 billion in 2017.
She said Government had reconciled all debts with creditors adding that growth in the medium-term was projected to be around 4 percent and that the contraction of pipeline debt has been cancelled indefinitely, including some of the contracted loans that have not yet been disbursed.
“On the unsustainable debt and high pace of debt accumulation, Zambia’s debt stick has been classified as being at high risk of debt of debt stress and in order to address the risks caused by this high level of debt, the President directed that we indefinitely suspend all pipeline debts until the debt is brought back to moderate risk of distress.
“Other measures include the cancellation of some of the contracted loans which are not yet disbursed to reduce the debt service burden, as well as undertaking refinancing of selected bilateral loans,” Ms. Mwanakatwe said.
She said President was eager to ensure that the financial debt stress the country was undergoing was brought under control
“The President has also directed that we carry out an asset reliability management exercise on the debt to ensure sustainability of cash flows, cease issuance of guarantees to commercially viable projects and cease the issuance of letters of credit and guarantees to institutions that are technically insolvent until the financial challenges are addressed.
The current stock of domestic arrears ( K12.7 billion as at endDecember 2017) has adversely affected economic activity through elevated non-performing loans and subsequently contributed to reduce private sector financing.
To address this, the following are the measures to be implemented:
• all ministries to concentrate arrears dismantling to areas that will significantly reduce non-performing loans and release liquidity to the private sector; ensure that ZRA comes up with profiles to liquidate current and non-contentious vat claims; the secretary to the cabinet to ensure that civil servants take annual leave to curtail expenditures related to personal emoluments such as commutation of days; and the ministry of Finance to enforce commitment controls to curb accumulation of new arrears.