Zambia risks defaulting on its debt repayments because the country has no significant repayment mechanism to do so, says the Centre for Trade Policy and Development.
And the Centre for Trade Policy and Development (CTPD) says most Zambians are not tax compliant owing to high taxes which he said act as a burden towards savings and development.
In an interview with News Diggers! Thursday, CTPD executive director Isaac Mwaipopo observed that government had a short period to pay back the numerous loans acquired over the years, and risked defaulting on its debt servicing.
“We have a number of countries that we have borrowed from. Some of them are actually from commercial markets, if you look at debts like the Eurobonds, and they have actually stipulated periods of time in which we are supposed to pay back. Most of them are maturing in the next three to four years and we are expected to pay back in full. This is besides the annual payment that we are paying against the principal loans that we got as a country. And when you look at Zambia’s ability to pay back these loans, currently, there is no much confidence to pay back the loans once they mature. So, our background to this position is the fact that there are no clear mechanisms that are being put in place in preparedness to pay back these loans that we are supposed to pay when they mature. We take note of the fact that there is a conversation around; there is need to set up what they call a Sinking Fund. And the idea behind a Sinking Fund was that it was to help to prepare for that time when loans are due,” Mwaipopo said in Lusaka.
He reiterated the need for government to reveal the actual amount of loans it has acquired from the Chinese government.
“We are aware that there are some loans that have been gotten from countries like China. But in terms of putting the actual figures, people are at a loss. If it’s the civil society, it’s worse. We clearly do not have the figures or a full understanding in terms of how much we owe the Chinese government through the various loans we have acquired. So, it would also be good that the Ministry of Finance considers giving updates in terms of how much Zambia owes the [People’s] Republic of China. We might get to that point where we have a challenge to pay back the loans that we have gotten,” he said.
And Mwaipopo said most Zambians are not tax compliant owing to high taxes which he said act as a burden towards savings and development.
“To a large extent people avoid paying taxes because of the high taxes that the country has. When you are running a business one the things that you would like to do is some level of facilitation, you can call it business facilitation or trade facilitation, if it’s in the language of trade. And for trade facilitation to occur one of the things that you should work towards is to simplify the process of doing business. Meaning, that it should not take me a lot of time to register my business or it should not cost me so much money to come up with that business.”
He added that misuse of public resources has further exacerbated non-compliance levels across the country.