Antonio Mwanza says the standoff between LAP GreenN and the Zambian government will dent the country’s credit reputation, a situation which will attract serious consequences.
Libyan investment portfolio LAP GreenN has vented anger at Finance Minister Felix Mutati for claiming that the Zambian government was in the process of settling t its US$395 million debt owed to the company when in fact “no single cent” has been paid.
In a letter of claim signed by LAP GreenN chairman Dr Faisel Geigab, the company disclosed that the Zambian government through the Minister of Finance had been sending bank transfer documents, but no actual cash was remitted to LAP GreenN.
“The now Minister of Finance was a member of Cabinet of the Zambian government at the time LAP GreenN acquired its shareholding in Zamtel. He is very familiar with the LAP GreenN matter. It would have been more useful of him to give a more comprehensive statement in parliament last month. We say this because the recent conduct of the Minister of Finance with respect to addressing the GRZ obligations to LAP GreenN has raised considerable concerns regarding the good faith and integrity of the minister,” stated Dr Geigab.
Reacting to the revelations in an interview today, Mwanza, who is FDD spokesperson, warned that failing to pay LAP GreenN could cost Zambia the IMF bailout package.
“The challenge that we have with that issue of LAP GreenN is that it is exposing the financial vulnerability in Zambia and raising serious questions in the minds of not only lenders but even investors with regards to the financial position of this country. If a government cannot manage to meet its financial obligations to a tune of $380 million, it simply means that they are now telling the world that as a country, the government is broke! And there are serious ramifications for such an outlook,” Mwanza said.
“Financiers, investors, become weary investing in a country whose fiscal position looks unstable. It simply means that even the issues to do with the IMF and World Bank, these loans we want to get, they also become very jittery to give money to a country where the possibility of getting back that money is very low. The message that is Mr Mutati is sending by failing to pay LAPGreenN is that the country is broke. And if IMF refuses to help us with the balance sheet, we will be left with no choice but to go on the open market to get money from the shacks at very exorbitant interest rates and there will be further consequences like we are already seeing if we fail to pay back that money. We have had that experience of vulture funds. LAP GreenN will end up seizing Zambia’s assets on the international portfolios in order to get that money. That is the direction that the financial arbiters will take. So we will end up losing property. So the minister needs to be honest because the people that are affected are the ordinary Zambians.”
He urged Mutati to be honest about national matters.
“There is need for the Minister of Finance to be honest on the issue of national matters. It is not only LAP GreenN that the minister is not forthcoming in terms of information and the minister has also not been forthcoming to the people of Zambia on the issue of debt. The actual national debt that this country is owing, the minister has not been forthcoming. We want the minister to be very honest and frank when he is dealing with national matters. The issue of LAP GreenN is a national matter. Government has a statutory obligation to pay LAP GreenN because they illegally got the company away. They went to court and lost because they failed to defend themselves here in Zambia,” said Mwanza.