Responses to Mwanakatwe’s points on the national debt

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1. MR. SPEAKER, LET ME NOW ADDRESS THE ISSUE OF REFINANCING OF THE EUROBOND THAT HAS EQUALLY RAISED INTEREST. THE GOVERNMENT HAS A FULL VIEW ON HANDLING OF THE BONDS AND IS COMMITTED TO THE REPAYMENT OF ITS LIABILITIES. WE ARE THUS COGNISANT OF THE NEED FOR A STRUCTURED REDEMPTION PLAN THAT WILL ENSURE TRANSPARENCY AND SMOOTH PROCESSES FOR HANDLING THE REDEMPTION OF THE EUROBONDS. IN THIS REGARD, THE GOVERNMENT HAS DEFINED A EUROBOND REDEMPTION STRATEGY (ERS) THAT WILL ESTABLISH AN OPTIMAL PLAN FOR REDEEMING OUR BONDS.

– No matter how colourful the minister’s financial jargon is does not change the fact that we borrowing in order to pay off borrowed money. Don’t call that normal practice, because it happens only when one if in financial distress. There is nothing sustainable about our debt when you are failing to pay council workers or when debt obligation has now become larger than the education budget, it’s shameful the level of dishonest of this finance minister.

2. THERE HAS BEEN NO DEBT DEFAULT BY THE REPUBLIC OF ZAMBIA ON DEBT OBLIGATIONS TO THE CHINESE GOVERNMENT OR TO OTHER LENDERS;

– Then why was Lungu asking the Turkish President to help Zambia pay its loans? And why is Government failing to convince the IMF with its fiscal position? She can’t even explain how the slow growth in the economy is going to impact the ability to pay the future loans. Clearly Mwanakatwe is not being a finance minister by playing politics. The finance minister should be blunt and honest with the president and the Zambian citizens.

3. THE LOAN AT THE KENNETH KAUNDA INTERNATIONAL AIRPORT [KKIA] IS STILL BEING DISBURSED BY THE LENDERS. IN THIS REGARD, WE HAVE NOT YET STARTED REPAYING THE LOAN BECAUSE THE NEW AIRPORT TERMINAL IS STILL UNDER CONSTRUCTION;

– This is another cheap and ignorant argument. Just because you have a debt service grace period does not mean you don’t owe. What the PF government failed to demonstrate in the first place is how a low traffic airport like KKIA will be able to generate enough income to repay the US$400 million. Will the airport have enough traffic to attract merchandisers and restaurants? How will china recover its money and how much will be left for National Airports Corporation? If the answer to these are there, that what we encourage her to demonstrate. If we wont service the loan now we will still have to service it in the future.

4. ZESCO LOANS FROM CHINESE LENDERS RELATE TO THE EXTENSION PROJECT FOR THE KARIBA NORTH BANK POWER STATION AND THE KAFUE GORGE LOWER POWER STATION CONSTRUCTION PROJECT, WHICH TWO STATIONS ARE INDEPENDENT OF ZESCO. ZESCO ONLY HOLDS SHAREHOLDING INTEREST IN THE TWO POWER STATIONS THROUGH SEPARATE SPECIAL PURPOSE ESTABLISHMENTS. LOAN REPAYMENTS FOR THE KARIBA NORTH BANK EXTENSION PROJECT ARE DULY ON COURSE WHILE LOAN REPAYMENTS FOR THE KAFUE GORGE LOWER POWER PROJECT HAVE NOT COMMENCED BECAUSE THE STATION IS STILL UNDER CONSTRUCTION;

– If ZESCO has shares in the power plants companies then, who are the other shareholders? What is also not clear is whether the special purpose vehicle is something that can be made permanent and allow the other shareholders to permanently have a stake in ZESCO. It does not matter whether government shows us the government shares in ZESCO, as long as China or whoever will wield significant power through these special purpose vehicles, then they will be effectively in control. To make things easy for Zambian, government should actuall release the audited ZESCO balance sheet, so that we see the proportion of the debt and get some comfort that they wont be a takeover. Dora Siliya as no credibility at the moment.

5. WITH REGARD TO THE DIGITAL MIGRATION PROGRAMME, A LOAN WAS OBTAINED FROM CHINA TO ENSURE THAT THE PROGRAMME IS IMPLEMENTED IN THE COUNTRY. GOVERNMENT IS SERVICING THE LOAN AND IS ON COURSE WITH DEBT SERVICING. ZAMBIA NATIONAL BROADCASTING CORPORATION (ZNBC) WAS NEVER OFFERED AS COLLATERAL FOR THE LOAN. INSTEAD, ZNBC AND STAR TIMES OF CHINA CREATED AN INDEPENDENT SPECIAL PURPOSE VEHICLE CALLED TOP STAR TO IMPLEMENT THE DIGITAL MIGRATION PROGRAMME; AND,

– It is clear by now that it is these special purpose companies being created by government together with China that are concealing some of Zambia’s debt obligations. The minister should explain further what financing agreements exist within these special purpose vehicles. The SPV is an old trick which people, especially in the business world understand. We need to be clear if loans under Top Star are guaranteed by the government, because that will make them effectively a burden on the tax payers.

6. FOR ALL OTHER LOANS THAT HAVE BEEN CONTRACTED FROM THE CHINESE GOVERNMENT, THE SECURITY ON THE LOANS IS IN FORM OF INSURANCE TAKEN FROM SINOSURE. FOR LOANS CONTRACTED BY STATE OWNED ENTERPRISES, AN INSURANCE FROM SINOSURE AND GUARANTEE FROM THE GOVERNMENT ARE IN PLACE. DEBT SERVICE FOR THOSE THAT ARE DUE IS ON COURSE.

– Now this is a clever statement where the minister is trying to emphasis that the loans are insured but is honest enough to say there are some government guarantees. Which is which? Please Madam Minister to keep us all in the clear next time just tell us the real figures that the government has guaranteed on parastatals and government institutions.

Lastly in her own words ”debt is like a pregnancy, you can’t hide it.”

Richard W

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2 Responses to Responses to Mwanakatwe’s points on the national debt

  1. Richard W., thanks for the effort to respond to or to rebutt the lies by the Minister of Finance. This PF cabal thinks it can lie to all the people all the time! Not this time. No amount of spin will conceal the amount of borrowing and associated corruption. Things will only get worse and the lies will become more evident. Ask Dora Slit!

    Mpundu
    September 20, 2018 at 11:59 pm
    Reply

  2. As we become more and incapable of repaying the Chinese the very many loans the Lungu government has taken and continues to take from them, sooner or later, China will definitely recolonise Zambia. They will then impose brutal laws on us. If you think that that is far-fetched, just look at how the Chinese government is brutally oppressing its own Uighur people in their region of north-west China. All because they are currently different many other Chinese, for example, that they are Muslim. The Chinese government is forcing everyone there to speak Mandarin, instead of their own Uighur language. Any resistance by a Uighur is met with physical force. Even worse, little Uighur children are now being forcefully usurped from their parents and taken to “re-education camps” very far away from home, where they are being re-moulded into Mandarin-speaking Chinese, completely stripped of their Uighur language, culture and identity. Meanwhile, their Uighur parents have no idea where their children have been taken to. Thus the parents are severely traumatized, totally helpless and powerless against an oppressive Chinese government. ZAMBIANS, BEWARE OF, AND BRACE FOR, THE COMING BRUTAL NATURE OF CHINESE COLONISATION.

    Chilufya Mutale
    September 21, 2018 at 8:59 pm
    Reply

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