Nevers Mumba says Finance Minister Felix Mutati’s act of under-declaring the country’s debt in Parliament early this year prompted the IMF to cancel its negotiations for a loan facility with Zambia.
Commenting on IMF resident representative Dr Alfredo Baldini’s pronouncement that the relationship between the Fund and Zambian authorities for a loan facility had become a saga following government’s ambitious borrowing policy, Mumba who is president of the opposition Movement for Multi-Party Democracy said the development did not surprise him at all because he expected it.
“The recent announcement by the IMF that they will not bail out Zambia with an estimated $1.3 billion loan did not come as a surprise to us because as we have shown several times before, the official debt position of $7.5 billion as announced by Finance Minister Felix Mutati in Parliament before the whole world is a big blue lie. Back in July, we produced an analysis to show that using figures from the Ministry of Finance itself, the total debt position, including local debts is at least $23.4 billion and is at risk of reaching $31 billion very soon if the PF get their way with new loans they are currently seeking. The external debt component of this is not less than $16.6 billion, factoring in debt repayments of the principal amount which so far total $888 million and 2017 debts estimated at $4.2 billion as of July 2017,” Mumba highlighted.
“The IMF is aware that the external debt of Zambia is unsustainable and has reached a level where the Zambian economy will be under tremendous stress in the coming months. The fund has repeatedly advised the Minister of Finance to place on the table a proper plan on how he intends to correct the ballooning debt. The IMF already knows that the Minister of Finance lied to Parliament and the world when he under-declared the national debt stock. This singular act is enough to cancel the discussions for a further loan facility with the IMF.”
Mumba regretted that Zambia may face the consequences that Mozambique suffered if Mutati continued lying to IMF authorities about the country’s exact debt stock.
“Mozambique suffered the consequences of lying to the IMF when it contracted $2 billion of secret loans of which $500 million vanished into thin air and obviously lined people’s pockets. After the lie was uncovered, donors suspended aid to Mozambique and the country defaulted on its debts. So the announcement by IMF that our current relationship with them is tenuous was fully expected by us from 6 months ago. While politicians may lie during their political campaigns, the economy is a different field which operates on the integrity of numbers. As they say, numbers don’t lie. The numbers clearly show that Zambia is on a path to a sovereign debt default within 3 to 5 years and the corruption in the PF has worsened our prospects of quick recovery,” said Mumba.
“The big question is, why is the minister lying about the debt stock? To whose benefit is he lying? Are we seeing parallels to the Mozambique situation? Are millions being secretly siphoned out of the treasury through corruption? The Finance Minister needs to come clean on the true debt stock as revealed by his own Ministry figures and place on the negotiating table a programme that outlines a change of approach in regards to borrowing.”