Govt tackles debt, liquidity, fiscal deficit
……broader policy reform on course to overcome challenges – Minister
GOVERNMENT is swiftly implementing measures as part of a broader policy reform to tackle the challenges that relate to debt, liquidity and fiscal deficit, Finance Minister Margaret Mwanakatwe said yesterday.
She said the measures would lead to a slowing down of the rate of debt accumulation in 2018 and over the medium term as well as tackle the fiscal deficit that is forecast to be below the 2017 announced deficit of 7.8% of GDP.
Ms Mwanakatwes’ statement comes in the wake of the latest Moodys and Fitch Agency ratings that downgraded Zambia’s long-term issuer ratings to Caa1 from B3 but maintained a stable outlook.
She said measures to address tight liqui dity in the domestic and ext ernal sectors were progressing.
“These measures include limitinJ domestic financinJ of the budget,cutting expe nditures on personal emoluments and reducing the cost of public sector operations and government is proceeding to dismantle arrears in different sectors,”she said.
And Ms Mwanakatwe says government’s reque st for assistance from Turkey to pay the US$750 million Eurobonds was not in any way a signal of failure to settle the debts.
Ms Mwanakatwe emphasised that Government remained fully committed to meeting all liabilities.
She expl ained that if Turkey agreed to offer help, Government would not take any unilateral action without consulting holders of Zambia’s Bonds.
“Whilst we are open to discussinJ financinJ of the Eurobonds to achieve lower costs and longer maturities with potential investors, this exe rcise will be done in full consultation with the bond holders,” she said in a statement.
She said Government had developed a Eurobonds redemption strategy which was undergoing integrity reviews prior to seeking cabinet approval.
“We are duty bound to interrogate any other asset/ liability proposals that may come from other private and bilateral partners, with the proviso that it should be cheaper and procedural in terms of international capital markets operations,” she said.
Meanwhile, Ms Mwanakatwe said Zambia’s debt accumulation would slowdown in the next two to three years as Government begun to work on measures to define dedicated streams for reserve accumulation.
It was projected that Zambia would attain a reduction in debt ratios after 2022, she said.
“Government has begun to work on measures to define dedicated streams for reserve accumulation. This is being done side by side with the asset/liability management exe rcise on ext ernal debt and the cancelation and postponement of some pipeline loans.
“From the work we have done so far in implementing measures, Zambia’s debt accumulation will slowdown in the next 2 to 3 years. Given this scenario fiscal sliSSaJes will recede and further, we do not see protracted debt because we will stand firm on our fiscal sustainabilit\ measures,” she said.