FORMER finance minister Dr Bwalya Ng’andu says the US $5 million which was paid to Lazard Freres for the provision of advisory services on Zambia’s debt management is not a big amount and it can actually be recovered if good restructuring is done on a single loan.
On Thursday, Finance Minister Dr Situmbeko Musokotwane told Parliament that government would not cancel the debt restructuring contract with Lazard Freres because it would only cost the country more money.
“We just advise that where your colleagues left you pick up from there. And indeed just like they picked up from the MMD of external debt of less than $2 billion and took it now to almost $15 billion currently. So yes we take over from who the last person left and you move forward either making progress or fortunately certain cases create problems. In this particular issue that you have raised, the advisors are already there and money has been paid for those advisors,” said Dr Musokotwane.
“In those circumstances, what would be the point of breaking the contract and taking each other to court? There is no point. We take it up from where you left it, money was paid and we will not break the contract and we will move forward. The contract to hire the experts is already running and it was incurred. Even if we were not to decide that and cut the contract that will just cost the country more money so we move forward.”
But in an interview, Dr Ng’andu said government would not lose out if UPND decided to cancel that contract because the money Lazard was paid is easy to recover.
“Lazard Freres were contracted to help with the management of the loan restructuring. That is what they were contracted for. That contract by the time our government came to an end, that contract was still running. So it is up to them whether they want to continue with them or not. It is as simple as that. So if he wants to continue with Lazard he can continue and if he does not want to he can cancel it. If you remember that the amount that was agreed was $5 million. We went through that process of paying the $5 million,” Dr Ng’andu said.
“In fact, in the process of restructuring, if you do a good restructuring, you can actually recover the $5 million in just one restructuring. If for example, you reduce the interest rate on a particular loan by a certain amount, you can actually recover that amount. So it is not as if it was a big amount. We went through that and if you go through your literature you will find that there were questions of whether the amount was too much and so on. I think that was defended as a rational decision and that the price was a reasonable price. So there was nothing unusual about it.”
Dr Ng’andu said the PF government engaged the best players in the market to help restructure the country’s debt.
“We went through the processes of contracting Lazard Freres, it is something that was carried out and it was clear information on how the process was done and they were part of that debt restructuring process. As far as we are concerned, we engaged the best players in the market to help us restructure the debt. If he wants to change it, that is up to him, he is the new Minister and he can go ahead and do what he wants to do. But what we did was the right thing at the time. We think we got a very strong team of dedicated professionals who have a very strong track record of helping countries restructure their debt and that is what we did,” said Dr Ng’andu.