Debt Restructuring Programme a sign we’re in a debt trap – Milupi

Alliance for Democracy and Development ADD president Charles Milupi says President Edgar Lungu’s move to send five Minister to China to negotiate a debt restructuring programme is a confirmation that Zambia is in a debt trap and needs urgent solutions to address the situation.

President Lungu has assigned five ministers to travel to China and engage authorities, financing institutions and business houses on a debt restructuring Programme.

“President Lungu assured the Chinese Ambassador (Li Jie) that Zambia will proactively engage China at every stage of the implementation of debt restructuring programme [to ensure] that there was no disruption in the financing arrangements, project implementation and overall contractual obligations. The President appealed to the Chinese Ambassador to inform the relevant Chinese authorities, financiers and companies that there will be no disruption in the ongoing projects because there was a care approach to guide the implementation of the measures announced by the Minister of Finance,” stated Special Assistant to the President for Press and Public Relations Amos Chanda in a statement, Wednesday.

Commenting on the development in an interview, Milupi said Zambia had no option but to negotiate a debt restructure plan with China.

“We have always said that we are in a debt trap. We have borrowed more that we can pay back. The very fact that government now is thinking about and putting in measures to restructure that debt is an indication and confirmation that we have always been right when we are talking about the fact that we are in a debt trap. Now when you are in a debt trap, there are two things you can do. You can pay the money, but in order to pay back you have got to have a source of funds. Now Zambia does not appear to have a source of fund. So, the next step is to try to restructure. In other words, if you said I will pay you in two months, you now say can you please understand I will pay you in six months instead, in the hope that something will happen which will bring those revenues. At the national level, that’s what this country is doing. And we understand that the debt from China is one of the biggest and China is one of the biggest lenders to this country in terms of the projects that have happened. So, its important that you engage with China to see what can be done with those debts,” Milupi said.

But Milupi said he did not understand why five ministers were sent to China.

“Now as to whether you require five ministers, I’m not sure about that. I don’t think so, I don’t think you require five ministers to do that. What you do require is the Minister of Finance. The Minister of Finance to be leading that delegation, if you are talking about debt restructuring, I think that is the carried-out plan. The Minister of Finance, that is my understanding because all debt that is acquired, that is contracted, is contracted by the Minister of Finance on behalf of the state. So, if you have to restructure, I would imagine that the delegation from the Ministry of Finance may be led by the Minister of Finance. As to whether you require five ministers…I’m not aware that to restructure debt you require various ministries to go, to go and do what? The Minister of Finance is the one who should do so. I mean if something was acquired for the Ministry of Infrastructure Development, ordinarily and as per constitution, that debt is contracted by the Minister of Finance on behalf of the state,” Milupi said.

“So, I can never know what President Lungu is thinking by sending the five ministers but all I’m saying is that ordinarily what should happen is that these debts are contracted by the ministry of finance if we are running the government properly according to the constitution. If you want to restructure therefore, it’s the Ministry of Finance to do it. Secondly are we saying that all these ministries have debt from China, I thought the debt from China is by way of infrastructure development? That involves the Ministry of Infrastructure Development and I think the minister of infrastructure development should have accompanied the delegation and maybe the Ministers of Works and Supply. So, it’s those ministries that should have accompanied the delegation to offer technical support. As for the rest of the ministries, I don’t know what they are going there to do. As to why the President has done that, I think only government can tell us more.”

Meanwhile, Milupi warned that Zambia was vulnerable to vulture funds if government failed to stick to austerity measures.

“Government on their own decided that they were going to restrict foreign travel because it is costly. And therefore, putting up this delegation, we would think that they thought about this delegation. I agree that there is need for austerity measures. And government therefore just has to ensure that not only do they pronounce these austerity measures, but they make sure that the austerity measures are implemented in a rational way that the country can see that yes this is the direction that we are trying to take. In other words, if you are cutting down expenditure on travels, don’t just announce it but put measures that show the whole country that you have restricted travel. This is a serious matter, it’s not even a matter of politics. This country needs to be saved in terms of limiting the expenditure because we cannot continue like that. If we continue like that, we will make ourselves liable to vulture funds, grabbing our assets all over the world,” said Milupi.

         

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