Patriots for Economic Progress leader Sean Tembo says Zambia is in a debt trap.
And Tembo says ministers are failing to perform because President Edgar Lungu is not providing leadership.
Speaking when he featured on Radio Christians Voice’ Chat Back programme, Thursday, Tembo said according to his own assessment, Zambia’s total debt was above $40 billion.
“Let me explain this $42 billion we have determined that we owe as a nation. This is primarily made up of external debts which is borrowing of cash, the Eurobond and such kind of borrowings. That according to our calculations is standing about $8 billion dollars. And then we have the domestic debt which is standing about $3.5 billion so you have about $11.5 billion [external and domestic]. Then we have Project Finance debt. Project Finance debt is debt whereby they don’t actually give you the money but basically finance your projects. Like the Kenneth Kaunda [International Airport] expansion project, we are borrowing $400 million. They didn’t give us the actual cash but they are funding the project. Similarly, Copperbelt [Simon Mwansa Kapwepwe] International Airport about $500 million. We have the lower Kafue Gorge Power project about $2.1 billion. The Serenje-Chipata rail line about $2 billion. So the Project Finance debt adds up to about $29 billion. So when you add the external debt, you add the domestic debt and you add the project finance debt, our total debt is above $40 billion,” Tembo said.
Tembo said the country had no capacity to pay back such levels of debts.
“The bottom line is when you look at our country’s capacity to pay back such levels of debt, I don’t think we have the necessary capacity. Because our GDP as at 2016 was about $20 billion. Now with the $40 billion debt you are talking about 200 per cent of our GDP. That is too much indebtedness for a developing country like Zambia to be able to pay back. And we have already defaulted on a number of loans. If you read the 2016 Auditor General’s report on this digital migration, the Star Times and ZNBC, the joint venture that came together to form this company that is undertaking digital migration, you will realize that out of the total loan that was contracted by this joint venture, government was supposed to settle a good portion of that amount and they defaulted. There was an amount of $2.4 million that was due in July of 2017 and that amount was not settled,” he said.
“You can see that our capacity to be able to service our loans is almost non existent. When you look at our tax collection you will realize that almost all the money that we collect through ZRA goes to the current expenditure, paying salaries and meeting the operational costs of government. So we don’t have excess cash to meet our debt obligations. We are effectively in a debt trap. Going forward I don’t know what plan our government has to try and service these debt obligations.”
And Tembo said President Edgar Lungu was to blame for the poor performance in government and not ministers.
“I wouldn’t put the blame on any government official. I wouldn’t put the blame of cooking up figures on the Minister of Finance [Felix Mutati] alone because there are a lot of financially literate people in government. The minister works with technocrats, permanent secretaries, directors. All those people are financially literate they understand the figures. So I wouldn’t want to point a finger at the Minister of Finance. If I where to point a finger at anybody, I would point it at President Edgar Chagwa Lungu. Because the buck stops with him,” said Tembo.
“I wouldn’t blame any minister in this regard because when you understand the way government functions, you will realise that the minister actually has very little power to decide policy issues. Whatever good ideas the minister might come up with, they are subject to the scrutiny of the head of state and his immediate advisers. And if they see that it doesn’t advance their political interest, it will be shot down. So with regard to the poor performance of government, I would not point a finger at any individual or minister because that would be unfair. You can only point a finger at someone who has power to change things.”