Finance Minister Margaret Mwanakatwe says Zambia is not in such a big economic crisis to warrant selling of state enterprises but that if a “fantastic opportunity” comes, government will certainly look at it.
And Mwanakatwe says the newly announced austerity measures which requires tightening of belts will affect everybody, including ministers.
Speaking on ZNBC special interview on the state of the economy, Mwanakatwe said government was not desperate to collateralise state institution, such as Zesco and ZNBC.
“In fact, this is why when you hear that Zesco or ZNBC has been given to the Chinese, we are saying this is not happening because these assets are created as a special purpose vehicle and they are not collateralised in any way. We have not collateralised any state enterprise and as such we will not be forced to sell them and we are not forcing ourselves to sell them but if an opportunity comes that is really fantastic, we will certainly look at it,” Mwanakatwe said.
She said the tightening of belts austerity measures would affect everyone.
“It (Tightening of belts) is affecting everybody. Every single minister. So the permanent secretaries are again under instruction to ensure that they are able to follow up on their respective ministries that there is tightening of belts. And we are not in such a crisis where we will need to be looking at every one of our state enterprises and selling them off. We are not there. We are saying let us manage our debt level downwards,” Mwanakatwe said.
And asked if she would consider calls by stakeholders for government to hold an economic indaba, Mwanakatwe responded by saying; “No, not in the near future anyway. We meet business chain stores quite often, we are constantly talking and even an indaba is what the public wants but certainly right now, I have not been called to get an indaba going yet.”
Meanwhile, Mwanakatwe said government was considering listing the Zambia State Insurance Company (ZSIC) and Zambia Forestry and Forest Industries Corporation limited (ZAFFICO) on the Lusaka Stock Exchange (LuSE).
“We are talking about listing them on Lusaka stock exchange, both ZISC and ZAFFICO, especially ZSIC. In fact, now I am looking at at least seven or eight state enterprises that are actually paying their dividends to government. So we have tasked IDC to ensure that these parastatals are turned to profitability and are able to contribute to the treasury. And those that are ailing and can’t declare the profitability we are thinking that we should be bringing private sector involvement and equity partners to be able to come in and take the shareholding [and] where they are ailing still, we are prepared to sale,” she said.
Asked if the implementation of austerity measures was necessitated by political pressure, Mwanakatwe denied.
“No, it is not political pressure but yes we had embarked on the measures last year and yes we are going through some of those things that we said we are going to do in the 2018 budget. When we say that the deficit is coming from 7.9 per cent in 2017, came down to 7.6 per cent in 2018, we are saying we want a deficit of 6.5 per cent. This is showing you that we are surely on the path to a smaller deficit and 6.5 per cent, if we are going to achieve it, these measures are absolutely critical to ensure that the revenue base is increased and the cost rationalisation is also embarked on resolutely,” she explained.
“We listened and we are still listening. We are in Parliament and there is a lot of debate in parliament and we listen there and also generally speaking we listen to other stakeholders externally as well as internally. We are a listening government. [And] we haven’t said that we are going to completely stop those loans that are required to spur this economy on. We have also said that we need to invest in social infrastructure [because] we can’t afford to stop that. So any new loan is going to be reviewed closely and we will only take on what we have to take on. Anything that is not a priority, we will not take on. And I would love a double-digit growth at GDP really and to be honest when you look at the potential that we have here and if we don’t have an adverse impact on the economy and if we can get back to the seven and beyond, we should be able to get to double-digit in the future.”
The minister further reiterated that government would not default in repaying the debt.
“Certainly on the external debt we will not default, we haven’t and we have managed the debt and we are continuing to manage our debt. On the local debt which is about K15.6 billion right now, we are going to systematically dismantle,” Mwanakatwe added.
She said out of the projected 73 per cent of Zambia’s debt, 30 percent of it was Chinese debt.
“It is the correct figure. In there, there is external debt, there are government guarantees, there is local debt. So it’s a combination of these that leads up to the 73 per cent. This is why we are saying [that] on the debt itself, it’s actually 43 per cent if we strip that out. And that is what we are trying to manage downwards to the level of 30 per cent. [So] 73 per cent is a combination of external debt, local debt, arrears, and guarantees. The debt on its own is 43 per cent. The lenders are many, multilateral, bilateral and in there is Chinese and about 30 per cent of the debt which is US $10.1 billion, 30 per cent of that is Chinese and the rest are multilateral, bilateral and the Eurobond,” explained Mwanakatwe.