The Ministry of Finance says government has no “hidden loans” and has asked members of the public to desist from publishing unverified figures of the country’s debt.
And the Ministry says it has not received any submission from any individual or organisation, which stipulates that the country’s debt figures have been hidden by the government, despite making a call for submissions to the public.
Meanwhile, the Ministry has disclosed that a full debt sustainability analysis has been undertaken and that it would soon meet up with the International Monetary Fund (IMF) to successfully finalise the engagement for a bailout package.
According to a statement issued by Head of Public Relations at the Ministry Chileshe Kandeta government has no incentive to hide any loan contracted either by central government or any State-Owned-Enterprise (SOE).
He further said that the varying numbers on what is presumed to be owed by the country by some analysts is speculative.
“There is no incentive to hide any loan contracted either by central government or by any State-Owned-Enterprise. This position was affirmed by the Minister of Finance in the first quarter brief shared with the public on 13th April, 2018. We also reiterated this position during our recent engagements with investors and cooperating partners in the United Kingdom and the United States of America. So, the varying numbers and guesses on what is presumed to be owed by the country by some analysts is speculative. As a Ministry, we are ready to engage and provide fiscal and debt information, as we do with rating agencies, to any credible analytical organization or indeed members of the general public,” Kandeta stated.
“We have received a copy of a report by Eurasia Group, an entity that publishes analyses on politics. A number of issues have been raised in their report regarding Zambia’s debt situation, fiscal matters, and our recent engagements with cooperating partners and investors. But as indicated by the Minister of Finance, Margaret Mwanakatwe, in our first quarter brief, an exercise was recently conducted to reconcile our debt statistics. Following that exercise, the country’s debt stock as at end December, 2017, stood at external debt – $8.7 billion; domestic debt – K48.4 billion; and domestic arrears – K12.7 billion. The highlighted figures are a summation of the loans that the government has contracted and drawn.”
He asked members of the public to desist from publishing unverified figures of the country’s debt situation.
“As part of the country’s governance commitment, every contracted loan is published in the government’s mid-year and annual economic reports. The reports are laid before Parliament as required by law and are also widely distributed. Despite our appeal last month, we have not received any submission from any individual or organisation, which stipulates the debts that have been hidden by the Zambian government. We, therefore, appeal to stakeholders to desist from publishing unverified data as such actions have the tendency to mislead the general public and cause unwarranted worry among investors and cooperating partners,” he appealed.
And Kandeta stated that the Eurasia Group, which was quoted by Bloomberg, asserting that government might be facing fiscal challenges and would likely default by 2019, was grossly misinterpreted.
“The country has not defaulted on any foreign debt, including the Eurobond interest payments, and does not intend to do so whatsoever. The Medium-Term Expenditure Framework (MTEF), covering projections on all economic and fiscal numbers over a three-year horizon, also provides a projection of fiscal operations and debt service. So, there is no room for default. Then, the issue of debt from China has been grossly misrepresented. The fact is that, Zambia has contracted both concessional and commercial debt from the world’s second biggest economy, and we have not defaulted on any. We further wish to restate that the implementation of an Asset Liability Management Strategy on Zambia’s Eurobonds, and for the loans from China, is a prudent option that is open to the country and would be undertaken as and when the need and opportunity arises,” Kandeta insisted.
Meanwhile, Kandeta stated that the delays in the country’s engagement with the IMF had nothing to do with electoral pressures.
“We note that Eurasia Group has associated the IMF Programme with electoral pressures. We are not aware of the pressures that are being referred to, and neither has any cooperating partner or investor communicated such to us. Our expenditure is focused on normal developmental programmes contained in the Seventh National Development Plan (7NDP) that has all the details on the projects being undertaken, and we will continue on this path. Regarding the engagement of the IMF, government has never back-peddled. The Minister of Finance has reiterated her commitment to the programme, and to creation of a platform under which the engagement with the IMF will be advanced. It is in this regard that a full Debt Sustainability Analysis was undertaken,” stated Kandeta.
“The results of the analysis are now being finalized and Cabinet will be briefed on the outcomes of the exercise, and on the executive decisions that are required to be undertaken to successfully finalise the engagement with the Fund. We will implement the decisions, particularly as they relate to the success of our debt sustainability actions. We take this opportunity to reassure the public and our cooperating partners that tough measures have been undertaken on fiscal restraint. These bold measures include the implementation of the Economic Stabilisation and Growth Programme that has seen the removal of subsidies; introduction of legal reforms to strengthen public financial management; and introduction of other structural reforms. According to our records, no cooperating partner has so far complained on the adequacy and potency of these measures. We, however, acknowledge that more needs to be done on fiscal consolidation.”