Finance Minister Margaret Mwanakatwe says external and domestic debt has increased to $9.51 billion and K54.6 from $9.37 and K51.9 billion, mainly on account of payment of some new disbursement.
And Mwanakatwe says debt repayment in 2019 will increase significantly on account of the continuous depreciation of the local currency, Kwacha, against major convertibles.
Meanwhile, Mwanakatwe says government has saved $10 million in the sinking fund in readiness for the Eurobond loan repayment in 2022 and beyond.
Speaking during a quarterly press briefing in Lusaka, Thursday, Mwanakatwe said external and domestic debt had increased.
“You may wish to note that a total of K38 billion was collected in revenue and grants over the period January to September, 2018, and was 1.1 per cent higher than the target of K383 billion. Total expenditure over the same period amounted to K50.3 billion which was below the target of K51.4 billion by 2.1 percent,” Mwanakatwe said.
“The external debt stock as at close of the third quarter was US$9.51 billion from US$9.37 billion at end of the second quarter of 2018. The increase in the quarter was on account of payment of some new disbursement. Debt service for three quarters of 2018 amounted to US $545.02 million. The stock of domestic debt mainly government securities, as at end of third quarter 2018 amounted to K54.6 billion from K51.9 billion at the end of second quarter 2018. Total guaranteed debt was at US $12 billion as at end September, 2018. Government acknowledges the rising vulnerabilities from its debt profile and is committed to implementation of austerity measures to ensure movement back to moderate debt risk distress. Verified domestic arrears as at end second quarter stood at K14.7 billion compared K13.9 billion recorded at the end of quarter one of 2018.”
And Mwanakatwe said the kwacha’s depreciation would negatively impact debt repayments and make the process costly.
The kwacha has significantly depreciated in the third and fourth quarters to breach the K12 per dollar psychological barrier in September, before regaining to settle at around K11.60 by early November, from an average of K10.99 per dollar in mid-September.
“We certainly are going to see an impact because as you know we have to buy dollars to be able to service our dollar Eurobond, so this is why for us, it’s important to maintain a stable kwacha. And I’m happy to say that it hasn’t really gone off the roof. So, it’s something that we want to see coming down (appreciating). Normally, the last quarter is strained because dividends are being paid. So, we would like to believe that some of this pressure is coming from demand to pay dividends by companies,” Mwanakatwe explained.
And on questions relating to the listing of shares of ZAFFICO on the Lusaka Stock Exchange (LuSE), Mwanakatwe expected the listing to oversubscribed given the huge public interest in the State-Owned Enterprise (SoE).
“ZAFFICO, we are going to list. And ZAFFICO is doing well. And we will keep you posted to the process. There is a process to list and we do want to ensure that this is a successful listing. And we will keep you posted as in how that will go. It suffices to say that, ZAFFICO is doing very well and I don’t think that this is a listing that can be undersubscribed. So, we are looking forward to Zambians participating in this listing and we will keep you posted on how it will be going,” Mwanakatwe replied.
Meanwhile, Mwanakatwe said government has saved $10 million in the Sinking Fund in readiness for the Eurobond loan repayment in 2022 and beyond.
“Yes, the Sinking Fund is alive and I think we have gotten in there about $10 million. Yes, we have $10 million that we have put in there and I think we do have time until 2022 when the first Eurobond of $750 million is going to be redeemed. That’s the first one; remember we have got three Eurobonds,” said Mwanakatwe.
She said government was gearing up for serious talks with the International Monetary Fund (IMF) who were already in the country ahead of next year’s Article IV consultations.