PERCEPTION OF ZAMBIA’S HIDDEN LOANS

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Hon. Margaret Mwanakatwe Minister of Finance
Hon. Margaret Mwanakatwe Minister of Finance

We would like to reaffirm that following the recent exercise in reconciling and updating our debt information, Zambia’s debt stock as at end December, 2017, stood as follows:

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1) External Debt was US$8.7 billion;

2) Domestic Debt was K48.4 billion; and,

3) Domestic arrears stood at K12.7 billion.

As Government, these are the loans that we have contracted. To this extent, we wish to state that every contracted loan is published in the Government’s Mid-Year and Annual Economic Reports that are laid before the Parliament as required by law. The Economic Reports are widely distributed to our stakeholders and to both the electronic and print media audiences.

The 2017 Annual Economic Report has been published and can be accessed on the Ministry of Finance website [www.mof.gov.zm] and data portal. The report contains creditor by creditor numbers.

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Members of the public or any creditor who feels that the debt stock has been under reported are encouraged to submit verified and audited information to the Ministry of Finance.

Note that all of Zambia’s debt payments are provided for in the audited Financial Report and cross checked against debts in the data base. The information is also laid before the National Assembly as required by law. We, therefore, have no incentive as Government to engage in debt misreporting to Parliament and to the public as such an act has adverse legal implications.

We appeal to stakeholders to resist the temptation of transforming their feelings and perceptions into unverified, unaudited, and speculative information which has the devastating effect of eroding confidence in the economy.

SPECULATION ON AN INDEPENDENT AUDIT

There have been insinuations in some quarters that the IMF requested the Zambian Government to carry out an independent audit of its debt. WE ARE NOT AWARE OF SUCH A REQUEST. Suffice to say, WE HAVE NEVER BEEN REQUESTED BY ANY ENTITY, INCLUDING THE IMF – TO CONDUCT SUCH AN EXERCISE.

However, we have been conducting Annual Debt Sustainability Analyses and this is done with credible international partners, including the IMF, World Bank, and the Macroeconomic and Financial Management Institute [MEFMI] of Eastern and Southern Africa, among others. The last Debt Sustainability Analysis [DSA] was conducted with the full participation of IMF and published in August 2017. Government is currently finalizing the 2018 DSA.

We appeal to members of the public who may not be clear with economic data and information to ALWAYS CONTACT THE MINISTRY OF FINANCE and obtain clarity to ensure balanced, factual and credible reporting and decision-making. On our part we will continue with stakeholder engagements on a regular basis to provide factual information and avoid speculation.

IMF PROGRAMME

Our engagement with the IMF is based on the home grown Economic Stabilisation and Growth Programme. Key among others is the development and implementation of the Medium-Term Debt Strategy. The strategy defines a sustainable debt management path. Going forward, we will continue to engage the IMF on various reforms, including debt management.

We will engage the IMF on similar lines as we did for our policy and structural reforms. This is with a view to agreeing on a path that reduces Zambia debt levels from a high risk of debt distress to a moderate and then low risk of debt distress over the medium to long term.

The DSA that the Government is currently conducting is an important part of this engagement. This is an annual exercise whose results will inform us of alterations to the strategy, if any. The results will be shared with our cooperating partners.

We also wish to state that we will continue to strengthen the process of debt contraction in the context of broader public financial management reforms. These reforms are being supported by various cooperating partners.

We will also continue to implement the home grown Economic Stabilisation and Growth Programme. This is an official Government assurance.

EUROBONDS

A competent team of officials from the Ministry of Finance and Bank of Zambia are working on modalities of handling Eurobond obligations when they fall due. ZAMBIA HAS NOT DEFAULTED ON ANY OF THE EUROBOND INTEREST PAYMENTS, and does not intend to do so.

Work has commenced early to allow for time to set our actions in motion. No bond holder will be coerced into selling off their position. Zambia will follow market-based processes in handling the bonds. This is an official Government assurance.

CHINESE DEBT

The issue of debt from China has been grossly misrepresented by some members of the public. Zambia has contracted both concessional and commercial debt from China. WE HAVE NOT DEFAULTED ON ANY OF THE DEBTS FROM CHINA or any other country. Restructuring is an option that is open to us and will be undertaken as and when the need arises.

We cannot foretell market conditions in the period 2021 to 2027, however, we are keen to put in place a more robust and smoothened cash flow in our debt sustainability strategy.

Zambia stands ready to cooperate with partners who are ready and willing to work with us for the development of a better Zambia.

//Original Signed//

Margaret D. Mwanakatwe, MP
MINISTER OF FINANCE
Chimanga Road
LUSAKA

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