Economist Noel Nkhoma says the discussion between the International Monetary Fund and government have been jeopardised because of the non-disclosure agreement in the Chinese loans.
In an interview, Tuesday, Nkhoma said Zambia risks losing out on a potential IMF bailout package because of the non-disclosure agreement in the Chinese loans.
“What basically happens is that they just basically bring out those issues that they are concerned about. In terms of detail, it remains confidential. The IMF are still questioning the integrity of the numbers in terms of the debt. Those are high level issues that were discussed but we won’t be able to get the details of the discussion. The elephant in the room is the Chinese debt. And that Chinese debt is what is shrouded in so much confidentiality,” he observed.
“And for them to disclose the nature of that Chinese debt, how the funds were disbursed and so on, that’s what creates a big problem for the government because mind you China does not give cash. They have what we call products, that product is dictated to you. If for instance you say you want a hospital, the costing and pricing is beyond what we would say your engagements. They just dictate. And this is where now the politicians find themselves. Out of that debt there is what we call equity relief, if you come to me and say Mr Nkhoma I want a bridge, the contractor who will build a bridge and the materials will come from Chinese through debt. So, the issue is that there is a non-disclosure agreement with these Chinese debts.”
He said Zambia was in a difficult situation because the IMF wanted full disclosure while the Chinese were advising the government to stay tight-lipped.
“So, it has absolutely compromise discussion between government and the IMF because while the IMF want all the information, the government cannot release everything because they are bound. And they can cause the IMF not to consider Zambia for a package because the Chinese are basically telling you that don’t disclose. And you have to oblige because those are the conditions you agreed to. There is a non-disclosure agreement,” said Nkhoma.
“So, it’s the Ministry, the onus is on the Ministry of Finance to divulge as much information as possible, or significant information that will prompt the other team to make a decision in your favour. So, I think we have to understand this from the context of full disclosure and transparency in terms debt portfolio. And if I were the Minister of Finance, I can go further and basically request that the debt which carries a clause of none disclosure, because they seem to have failed first of all to disclose who the lender is. But the issue is they have failed to persuade the lenders to give them a moratorium, how are they going to persuade them to agree that they should disclose who the lenders are and the amount of money involved? So that the issue.”