UPND leader Hakainde Hichilema has challenged the PF government to disclose where the borrowed resources were applied and also to give a clear plan for repaying the money.
In a statement, Hichilema stated that the International Monetary Fund (IMF) had confirmed what the UPND leadership had always said “that Zambia is one of the countries with the largest debt stocks in sub-Sahara Africa”.
The IMF on Monday indicated that Zambia has the highest debt in Sub Saharan Africa.
It indicated that the country’s public debt had been rising at unsustainable levels and was now at high risk of distress.
The Bretton Wood institution announced last week the halting of bailout talks with Zambia owing to the huge debt the government has and intends to contract for its infrastructure projects, with a budgeted amount of almost a billion dollars in the 2018 national budget – almost the amount needed for the bailout package.
Making a presentation at the IMF sub-Sahara Regional Economic Outlook meeting in Lusaka yesterday, IMF country director Dr Alfredo Baldini also disclosed that Zambia’s interest payments on the accumulated debts now accounted for 22 per cent of government revenues.
“The growth of the economy in Sub-Sahara Africa has been decreasing from six to seven per cent to three to four per cent with an exclusion of South Africa and Nigeria because these are the two biggest economies of the region. Zambia’s public debt has been rising on unsustainable pace and now there is a big risk of debt distress in Zambia which has been driven by the large fiscal deficits. Zambia’s public debt is much higher than the rest of the countries in the region and its economic recovery is growing at a very lower pace which is very worrying,” Dr Baldini said according to statements issued after the meeting.
“This is diverting resources from essential social sectors…The shock scenario [for Zambia] reflects a nearly full blown crisis similar to the one experienced back in 2015 when the REER (Real Effect Exchange Rate) exchange rate depreciated by 30 percent, copper prices fell by 20 percent, and growth slowed down from nearly 5 percent in 2014 to 2.9 percent in 2015. The shock scenario is less severe in terms as the REER depreciates by 15 percent and copper prices are projected to drop by 15 percent close to the 20 percent drop in 2015. The pass-through from the exchange rate depreciation to inflation in 2015 was large with inflation jumping from less than 7 percent in May 2017 to 21 percent in December 2017. Against this background, real growth is projected to fall to around 3 percent compared to 4.5 percent currently in the baseline reflecting the impact on consumption.”
Following the IMF’s statement, Hichilema recalled that when the UPND leadership raised alarm on excessive borrowing by the PF government and the “reckless” manner in which it was using the borrowed resources, it was subjected to malice.
“Zambia’s debt has now reached unsustainable levels. This was despite the fact that we did not only advise against borrowing from expensive sources, but we also offered alternative financing solutions which included limiting debt acquisition or borrowing, borrowing only when it is necessary but from cheaper sources, domestic resource mobilisation through investment attractiveness and economic expansion, prudence, investing in productive sectors as opposed to consumption and zero tolerance to corruption. This is a tragedy and a time bomb for the country. What the PF has done is to consign future generations to perpetual debt and poverty. All the money that will be used to pay back this debt could have been deployed to education, health and agriculture,” Hichilema stated.
He lamented that to date, most Zambians, especially youths and women, were struggling without decent jobs while others were desperately being engaged in occupations that amounted to slavery within the country.
“We challenge the PF leadership to tell the nation where the borrowed resources were applied and also give us a clear plan for repaying the money,” stated Hichilema.
“We know that while the PF has looted the treasury, it’s the Zambian taxpayers who will have to bear the full burden of repaying the expensive and corruption driven loans through increased taxes, levies, road tolls, Zesco and water tariffs, land rates, costs and other punitive measures. Chipantepante is now in full gear! Let us brace ourselves for hard times.”