No Hid­den Loans, Zam­bia will not De­fault on its Debt – Mukuli Chikuba

Zambian Business Times - - FRONT PAGE -

THE Fi­nance Min­istry in Africa’s sec­ond largest cop­per pro­ducer Zam­bia, con­firmed that the South­ern African na­tion would not de­fault on its debt as al­luded by var­i­ous ex­ter­nal agen­cies. Zam­bia has been cited for hav­ing debt stress by both the World Bank and IMF. Speak­ing dur­ing an....

“I know what the na­tion’s debt ser­vice is over the next 20 years be­cause we run those num­bers. Ser­vic­ing debt how­ever takes away the ben­e­fit of us­ing funds for eco­nomic gain and that’s what we are try­ing to bal­ance as a Min­istry. We are able to stand and have the req­ui­site tech­ni­cal ex­per­tise to get the econ­omy back on its feet.” Mukuli Chikuba

THE Fi­nance Min­istry in Africa’s sec­ond largest cop­per pro­ducer Zam­bia, con­firmed that the South­ern African na­tion would not de­fault on its debt as al­luded by var­i­ous ex­ter­nal agen­cies. Zam­bia has been cited for hav­ing debt stress by both the World Bank and IMF. Speak­ing dur­ing an in­ter­view on 09 April, Per­ma­nent Sec­re­tary for Eco­nomic Man­age­ment at the Min­istry of Fi­nance Mukuli Chikuba told the na­tion that Zam­bia was up to date and would not de­fault on its debt obli­ga­tions. The IMF have en­dorsed struc­tural re­forms we have un­der­taken such as re­moval of sub­si­dies in the en­ergy sec­tor, widen­ing of tax­a­tion base, pub­lic fi­nan­cial man­age­ment bill and other plan­ning and bud­get re­forms. The is­sue with the IMF is more on the path on bor­row­ing Zam­bia will take, he said.

Our strat­egy is to slow down on debt con­trac­tion and cur­tail pro­nounce­ments which have been mis­taken by the pub­lic for ac­tual debt in­curred. Mr Chikuba stated that the Min­istry of Fi­nance has for a week em­barked on a debt sus­tain­abil­ity anal­y­sis which would com­plete by this week and that re­sults of the ex­er­cise is what Zam­bia would be pre­sent­ing to the IMF at the spring meet­ings this month. The ex­er­cise has cov­ered rev­enue pro­jec­tions, growth rates, the ex­ter­nal sec­tor, cur­rent ac­count and bor­row­ing re­quire­ments.

Mr. Chikuba fur­ther chal­lenged all that claim gov­ern­ment has hid­den debt to visit the Min­istry of Fi­nance web­site for eco­nomic re­ports pub­lished. “If we had hid­den loans then where are we ser­vic­ing them from? He asked?” All obli­ga­tions con­tracted by the state are vet­ted and signed off by the At­tor­ney Gen­eral and Fi­nance Min­istry in align­ment with cap 366 of the laws of Zam­bia. “We have ac­cu­rate records of our debt, he said” Gov­ern­ment has no le­gal obli­ga­tion other than that pre­scribed by cap. 366.

Mr Chikuba clar­i­fied the neg­a­tive debt dis­tress con­no­ta­tion, cit­ing that if the na­tion con­tin­ued on a bor­row­ing path, then debt lev­els would be un­sus­tain­able. He ad­mit­ted that the great­est chal­lenge has been pro­nounce­ments which cit­i­zens and other ex­ter­nal bod­ies have been to­talling to proxy the na­tion’s debt lev­els.

“Ex­ter­nal en­dorse­ments is what we need from rat­ing agen­cies and po­lit­i­cal com­men­ta­tors to in­stil the right con­fi­dence in the econ­omy,” Mr Chikuba said.

The Per­ma­nent Sec­re­tary con­firmed Zam­bia’s ex­ter­nal debt at $USD8.7bil­lion, do­mes­tic at Kwacha equiv­a­lent of $USD5.1bil­lion with ZMW12.7bil­lion in ar­rears with ref­er­ence to the quar­terly fi­nance re­port pro­vided by the min­istry.

Go­ing into 2018, Mr. Chikuba said gov­ern­ment ex­pects growth of above 4.1%, in­fla­tion of be­tween 6%-8% fac­tor­ing fuel and elec­tric­ity price ad­just­ments, lend­ing rates to dras­ti­cally plum­met af­ter the Min­istry of Fi­nance pays down on ar­rears and in­crease in in­vest­ment flows. Zam­bia is the mid­dle of a USD1.3bil­lion bailout pack­age ne­go­ti­a­tion with the IMF.

– Mukuli Chikuba

Left to Right – Res­i­dent IMF Rep­re­sen­ta­tive to Zam­bia Al­fredo Bal­dini and Per­ma­nent Sec­re­tary Eco­nomic Man­age­ment

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