UPND chairperson for finance and economic affairs Situmbeko Musokotwane says government’s request for a six months suspension on repayment of the three Eurobonds is an admission to the whole world that the country is bankrupt.
And Musokotwane says government should not use COVID-19 as an excuse for failure to repay debt.
In an interview, Musokotwane said government’s suspension request had shut the country from money lenders and investors.
“Yesterday (Tuesday) the Zambian government requested that interest on the three Eurobonds be suspended between October and March next year, meaning that it should be paid for that period of time. What is not clear to us is that after March next year, will they be able to pay or they won’t be able to pay? But the broader meaning is that we are basically admitting to the whole world that we are bankrupt and unable to pay the our debts,” Musokotwane said.
Musokotwane warned that the move would make it difficult for government to borrow when faced with emergency situations.
“We should not use COVID-19 as an excuse. COVID-19 is just an additional small element. The real reason why we have failed to pay our dents is because we have borrowed too much and now when it’s time to pay, we are unable to pay. This is very sad because who knows about tomorrow? We might be faced with an emergence situation where we need to go back to the people and say ‘look, I have a drought, I have too much flooding or I have this problem, can I borrow money from you?” he asked.
“So, with the announcement yesterday saying that we are unable to pay, it means that we have shut ourselves to those with money to lend. On top of that, we have also shut ourselves to people with money to invest in Zambia. If anyone was thinking of investing in Zambia, investing in a hotel, a farm, manufacturing, they will be asking themselves a question ‘is it wise for me to go and invest my hard earned dollars in a country that is bankrupt? The answer is most probably no. So, we have made the process of economic recovery harder because no one now can trust us.”
And Musokotwane said the 2021 budget which is scheduled to be presented to Parliament today would basically be for emoluments and debt servicing because there was no money.
“This budget for 2021 is basically just a budget for paying salaries and servicing debt. There is hardly any money at all left for anything else. That being that, of course there is no country that wants a budget which is only for paying salaries and servicing debt when you also need to hire teachers, doctors and to provide all sorts of services. So, what I would have expected is can we have a clear roadmap and policy by the government on how this debt crisis is going to be addressed because as long as it remains unaddressed, I am afraid the budget is only going to be for paying salaries and servicing our debt. If we don’t pay the debt after March next year, it means that we are making the reputation of the country even worse and there will be no more access to borrowing and no more access to investment. Without that roadmap, all those promises which the president gave in his speech, and all the promises which the minister will give in his speech to parliament tomorrow (today) will amount to nothing,” said Musokotwane.