CONSIDERING the nature of loans that the PF has continued to contract, it can no longer be in doubt that the PF government is not committed to debt sustainability. This regime has such an extreme insatiable appetite for borrowing that they don’t care about the implications any more. At this rate, it is becoming increasingly clear that they will never get help from the International Monetary Fund (IMF), they may as well close that chapter.
It also appears that Zambia is not really genuinely interested in fruitful discussions with the IMF. They are only creating an impression that they are talking to the Fund just to fool citizens that they remain committed to financial discipline. But by now, they know that an IMF deal is out of question. The conditions put across are just too much for them.
We understand that the biggest problem that the IMF has with the Zambian government is that our debt portfolio is a moving target. When the Minister announces in the morning that the current external debt stock is US $11.2 billion, by afternoon, that figure has gone up. There has not been any stop to borrowing and there has not been any slowing down in unprioritized spending.
It even worries us more to hear the Ministry of Finance announce that they are now in the process of hiring a debt management consultant to provide “financial advisory services on asset and liability management of the country’s debt portfolio”.
“As part of action taken towards the debt sustainability goal, Zambia is in the process of assessing the proposals received following our recently issued tender request for financial advisory services on asset and liability management of the country’s debt portfolio. The call for tenders has since closed and the process of shortlisting and finally selecting a financial advisor will soon be completed,” said Dr Bwalya Ng’andu in a statement, Tuesday.
Now, pardon our ignorance, but is this not what the Minister of Finance is employed to do? Why do we need another middle man to negotiate on our behalf? Anyway, whatever the case, the same problem that the IMF has with Zambia is the same problem that this consultant will face; Zambia’s debt is a moving target. In fact, we don’t understand why government has to hire a debt dismantling consultant when they were not consulting anyone at the time of borrowing, not even Parliament.
What will happen next is that Zambia will end up owing, not only the creditors, but the same debt image-builder as well because the debt mountain we have created cannot be dismantled when more loans are being contracted. PF must know that even Jesus cannot help them come out of this financial crisis unless they repent. Repenting means realizing that too much borrowing is bad, realizing that spending without a plan is wrong. Once they confess their mistakes and demonstrate through action that they have truly stopped the reckless spending, then they will make progress towards debt sustainability. No witchdoctor, not even Seer 1 or Baba Mukulu, will fix this mess.
That’s why we say it is beyond any logical comprehension or any morality as to how this PF government operates. The PF government’s addiction to debt contraction and reckless spending is what will kill Zambia, nothing else.
Just look at how much they borrowed in the first half of 2019 alone! According to the Ministry of Finance, during the first half of 2019, government contracted four new loans amounting to US $433.38 million to finance what they described as development projects broken down as follows.
1. Defence Project Bank of China US $30,000,000.00 (contracts awarded to unknown)
2. Home Affairs HSBC Bank US $69,896,630.23 (contracts awarded to unknown)
3. Financing of medical equipment for various hospitals Lilipeck International Fze, Dubai.
US $288,486,918.90 (Single-sourced loan and procurement)
4. Fertilizer Procurement African Export Import Bank US $45,000,000.00 (contracts awarded to
Now remember that on 14th and 15th February 2018, the Treasury (Ministry of Finance) authorized the Ministry of Health to single-source the purchase of medical equipment and this authorization was provided to the Zambia Public Procurement Authority on March 7, 2018. The Ministry of Finance signed a single-sourced loan with Lilypeck International, a trading company based in Dubai for US $288 million. This is a scandal that is yet to unfold. Fili uko tuleya…