There needs to be transparency in the acquisition, terms and structure of Chinese loans, says CTPD.
And the Centre for Trade Policy and Development (CTPD) says there is serious need to put heads together in finding lasting solutions as the current debt situation might get severe.
Zambia’s debt arising from Chinese loans in the year 2016 rose by 350 per cent from two loans contracted in 2015 to nine the year after.
New loans from China increased by a staggering 259 per cent (from US $484 million in 2015 to US $1.6 billion in 2016), according to data obtained from policy think tank, ZIPAR.
In a statement, CTPD executive director Isaac Mwaipopo appealed to President Lungu to take advantage of the ongoing 2018 Beijing Summit of the Forum on China-Africa Cooperation, which kicked-off yesterday and concluding today, to renegotiate Zambia’s Chinese debt.
“Renegotiation of Chinese debt; Zambia is at high risk of debt distress, and the Chinese government has time and again signalled that China might be open to supporting the Zambian government to restructure its debt portfolio. Zambia must, therefore, take advantage of this platform and bring to the table a conversation around the need to renegotiate its Chinese debt,” Mwaipopo appealed in a press release, Monday.
“Zambia should avoid at all costs acquiring more debt during this summit.”
He, however, cautioned the Zambian delegation currently in Beijing to ensure that any restructuring of the country’s loans must be transparent.
“Transparency and Accountability in loan acquisitions; the terms and structure of Chinese loans to Zambia – and details about how they are secured – must be transparent. Not only will this help to allay market concerns on the basis that investors should be provided with the key commercial terms of Zambia’s debt portfolio (thus reducing uncertainty), but it will permit greater oversight of the projects the government is promoting and will improve value for money,” Mwaipopo advised.
“CTPD remains deeply concerned about the growing negative publicity of Zambia, which has now penetrated the international media space, there is need to come together as a country and find common ground that can help to resolve the current situation.”
He also urged other African Heads of State attending the Forum to ensure that projects financed through the platform are integrated into and consistent with countries’ national development plans.
“CTPD recognizes the fact that, FOCAC is the premier platform through which trade and investment is mediated between China and African countries. Therefore, CTPD recommends the following to all the African Heads of States attending the summit running under the theme ‘Win-win cooperation and joining hands to build a closer community with a shared future for China and Africa’,” he narrated.
“Project financing; it is important to ensure that projects financed through FOCAC are integrated into and consistent with countries national development plans. This will make FOCAC projects more coherent and focused. It should not be just be because China has resources to lend out and countries jump on them without taking into consideration how some of the projects fit in with national priorities.”
And Mwaipopo added that ahead of the 2019 national budget, there is serious need to find lasting solutions as the current debt situation might get severe.
“As the 2019 budget debates draw closer, there is serious need to put heads
together in finding lasting solutions as the current debt situation might get severe. It is our sincere hope that the departure of the IMF representative to Zambia (Dr Alfredo Baldini) will not affect prospects for accessing the desperately-needed support from the International Monitory Fund as the failure to access that support could have severe implications for the country,” stated Mwaipopo.