Charles Milupi says he agrees with Finance Minister Felix Mutati that the country may not be able to repay the Eurobonds, saying the ruling party wasted the loans in corruption.
Addressing the media in Lusaka yesterday, Mutati said Zambia is currently facing major challenges among them; debt sustainability, domestic resource mobilization, and fiscal consolidation, adding that the country may default on the repayment of two Euro bonds it acquired at the time of their maturity
“One of the issues that we are still grappling with, is the whole issue of debt sustainability. How much more can we borrow as a country without risking the fundamentals of Zambia. We have employed as you know and have in place a medium term debt sustainability strategy which primarily focuses that the first call will be for this country to focus on securing public-private partnership. The second call will be issues around grants, and the third call will be concessionary financing before you go to the last one which is basically commercial borrowing. That is the pyramid of our borrowing strategy, including the work that the PS is doing to refinance the two Euro bonds that will be maturing; ecause quiet frankly at the point of maturity, we may not have the bottom cash to deal with that,” Mutati said.
“Issue number two is the whole issue of domestic resource mobilization. Beyond just mere tax revenues, non tax revenues that are critically important to augment the efforts that ZRA is doing. We have had some drawbacks in terms of system implementation such as fiscal devices which should have been implemented a lot earlier including tracking airtime, the single window. These are critical system issues that were part and parcel of our budget revenue issues.”
The Finance Minister disclosed that government had so far paid off K4.2 billion out of the K17.2 billion total estimated arrears.
“The third challenge that we face is fiscal consolidation. You cannot spend money that you don’t have neither can you borrow beyond your capacity to repay. We have attempted to break down and bring down the arrears as much as practically simple and PS will tell you that this year alone, we have paid off K4.2 billion of the arrears that were estimated to be at K17.2 billion, I repeat K17.2 billion and that is the arrears. We continue to clear arrears not only to contractors, pensioners, litigation and various other things including fuel. That is a major challenge,” said Mutati.
But commenting on Mutati’s fears, Milupi told News Diggers! that the PF government wasted Eurobond money on corruption.
“I agree with the Minister’s statement 100 per cent because I do not see what capacity was created by the Eurobond to be able to pay it back. The Eurobonds were obtained at high interest rates and they were used on roads so most of the money really just went to feed corruption. These roads were put up for political reasons so they have not created capacity within the economy to generate extra funds within the economy to be able to pay back those loans. And as a matter of fact, from the time the loans were obtained, the economy has worsened,” Milupi observed.
“There is no way a road in Zambia can cost over a million dollars per kilometer, but that is what we saw here. Now, when you look at the economy, we have run out of money and that is why there is desperation to borrow the $1.6 billion from IMF to fill the gap in this year’s budget.”
He warned loans would not solve Zambia’s financial deficits.
“Getting loans is premised on good governance, you have to have accountability by way of free press, and they have shot themselves in the foot by closing The Post, by also suppressing the opposition and so on, by incarcerating Hakainde Hichilema, they have demonstrated to the world that there is no good governance and they have put at risk their ability to get that loan from the IMF. So, in the near future, this economy will not generate sufficient funds to pay back. They are struggling now with interest but where will they find the money required to pay that debt?” asked Milupi.
“This government is very irresponsible. Look at what they are doing. Instead of focusing on the issues, they are busy now inviting so many presidents. Can they tell us how much it costs to host a visiting president? And what benefit are we getting from that? And what are they coming in Zambia to do? The point I am making is that it is pure expenditure and corruption has also continued. We are seeing houses that have been built and so on. We have no ability to pay back the money and for your own information, that is commercial money… I see harsh times ahead. The only thing that can change this is to have a government in place that understands the economy.”