Former agriculture minister Bob Sichinga says government, under President Edgar Lungu, is unable to implement debt sustainability as it will lead the country into further debt distress.
And Sichinga says he doubts the accuracy of government’s official debt figures.
Reacting to Finance Minister Dr Bwalya Ng’andu’s state of the economy briefing in an interview, Sichinga said it was a joke for people to believe that the PF had the ability to apply debt sustainability measures.
“Lungu’s regime must be removed, they are going to lead the country to more and more debt. They are irresponsible, they cannot do it! It doesn’t matter which Minister of Finance you are going to bring in, if Lungu is doing his own things in contracting debt; because he wants to give contracts to his friends at very exorbitant prices to people who paid him money for his campaigns, it is going to be a very expensive preposition. So remove the government and we start afresh,” Sichinga said.
“IMF is not going to come if you are not going to show that you are sustainable. Now, this issue they are calling austerity measures, it is a joke! We are playing here. You take a plane load of people; you go and buy an expensive aircraft and you carry the President around and you say you have austerity measures being implemented, you must be joking! You are taking money out of government coffers and you are distributing to your cadres, how are you going to sustain the deb? It is not possible. It is a joke! IMF are not going to do that…you are just a small country that they can afford not to support; they don’t have to support if they are not convinced.”
He insisted that Zambia’s debt was unsustainable.
“When you go out and borrow and say ‘you have capacity’, no! you don’t have the capacity because you are so dependable on so many other factors that are out of your control. I would be very surprised if IMF was to say yes without these conditionalities. So the ball is in our courts, it is not for IMF to sort out our problems, it is our problem. It is like in a house, if you look at your revenue and you say you have taken a loan, you will be paying back on the house you live, can you manage to pay from your salary? The answer is no. It is not possible because we still have to eat; we still have to buy medicals; we still have to maintain roads; we still have to support education; we still have to support the social cash transfer. Can you sustain it when you have paid all that? Our ability to pay is what is called sustainability. Now where does our government get this money? Mostly taxes,” he added.
“Now sovereign debt, you cannot say that ‘alright let’s pay salaries first then we can do this, no! They want you to pay, you have to pay that amount before the salaries. Now the question is that are you able to do that? The answer has to be no! You are not able to! The amount you have to pay for those loans is to high based on the agreements you reached to the lenders whether they are Chinese or IMF. The issue is can you raise sufficient money? KCM is not running now so where are you going to get the foreign currency to cover your loans? The major source of foreign currency is the mines. Now if the third of that amount which you have borrowed is actually corruption money, it is going into individual pockets, how can you sustain that? It is not possible! Because that money has gone into individual pockets and the President himself has already said ‘yes’ he has a corrupt government that money is not going into that asset which can yield the profitability that can enable you to pay that loan. So you can talk about a debt of $11.2 billion but how much of it is genuinely productive?”
And Sichinga doubted the accuracy of government’s official debt figures.
“How are reliable are those figures? That is the first question we have to answer. We are not able to take the Minister’s word for it because we actually know that many many items that are obtained, we are talking about the issues of loans and so on have not be disclosed. So we are not sure that the figures he has given to us are in fact accurate. The figure of the debt is questionable! How much of it is sovereign guaranteed of that amount? The second one, the local debt how true is it? How accurate is it? How many companies have gone out and borrowed on the global market on the basis that they are operating from here, Zambia? Let us take in mind the mining companies, the mining companies which include Vedanta through KCM and of course Mopani; how much have they borrowed on the basis of their operations here in Zambia? Because all that debt is contingent on Zambia’s ability to be able to produce the commodity which those companies can sell to sustain their own debts,” said Sichinga.
“There is the local debt itself; how much is in what we call productive investments? In other words, that they can yield a return to enable paying that debt, that is what the IMF means when its talks about debt sustainability. Can you pay that debt based on what is coming out as a yield, as a profit, as a benefit, as an income that is coming from that investment? When IMF is talking about debt sustainability, they are saying that ‘ you have contracted debt; you have taken loans, how are you going to sustain those loans? Can you pay them over the period you say you will pay them?’”