FORMER finance minister Ng’andu Magande says restructuring of bond loans requires financial manipulation, stressing that the people who bought the bonds are not interested in anything else but getting their money back.
In a statement, Magande said in the absence of repayment, the bond holders already knew what assets they would be interested in seizing.
“The PF government got loans from rich people in the streets who had surplus money to lend. They engaged private companies called bond arrangers, who advertised in reputable international financial magazines, such as The Economist and Forbes. The people who answered the advertisement and bought the bond are mostly bazungu (Caucasians) or foreign private companies and known only by the bond arrangers and the PF government. The bond buyers do not require the PF government to use the bond proceeds for any particular project as long as they will be paid back the loan, plus interest on due date. Many of the bond buyers have never visited Zambia, but have some idea of assets of the government which they could seize if they are not paid…bond loan restructuring requires financial manipulation,” Magande stated.
He said the loans which were restructured during his time in office were different as they were development loans from public institutions and countries, making it easier to negotiate.
“The loans I handled were advanced on production of project proposals by the Zambian governments dating back to UNIP days. They were called development loans as they were connected to specific development projects. The negotiations were meant to write-off or change the repayment periods. This required us to explain the reasons for failure of the various Zambian governments to properly use the loans to attain the various project goals. We had to explain how differently and efficiently the Mwanawasa government was going to implement the failed projects and new projects. Each institution, both foreign governments and IMF, AfDB, WBANK, OPEC etc that gave a development loan had a development project document and was entitled to assist the Zambian government in implementing the project. The lenders were mostly public institutions and negotiations required diplomacy and public planning and development management, which are my strengths,” stated Magande.