ZAMBIANS should brace for hard economic times ahead under the PF government, warns Geoffrey Bwalya Mwamba. And Mwamba, popularly known as GBM, says the PF government’s unending road projects were being used for kickbacks. Commenting on the World Bank revelations that Zambia will in a single day in 2022 and 2024 repay US$750 million and US$1 billion respectively towards the Euro-bonds, Mwamba said if Zambians genuinely voted for the PF in 2016 then this was done at own peril.
The World Bank in its 10th Zambia Economic Brief titled ‘How Zambia Can Borrow Without Shame’ produced in December 2017 stated that money borrowed in a single day must be repaid in a single day.
“This is an issue for many African sovereigns that issued Eurobonds shortly after the financial crisis. In a single day in 2022, Zambia must repay US$750 million and in 2024, it must repay US$1 billion. The third Eurobond (issued in 2015) has a different structure and amortises in three equal instalments in 2025 – 27. The mounting repayment risks reflect not only large payments in single years, but also the bunching of repayment years. Zambia’s redemption profile highlights how efforts will likely be needed to buy back some of this debt in the hope of smoothing repayments. The concentration of Zambia’s maturities coincides with that of many other African countries, a further potential source of roll-over risk,” the World Bank stated.
The brief added that unsustainable debt burden would impact on poverty reduction in Zambia.
“The cost of servicing the Eurobonds has increased with each issuance, with the coupon rate increasing from 5.375 per cent in 2012, to 8.5 per cent in 2014 and 8.97 per cent in 2015. This has left very little in the way of discretionary resources to fund service delivery, as over half the budget is needed to meet the government wage bill. This reduces the ability of Government to respond to funding needs identified in the national development plan,” the brief stated.
And British High Commissioner to Zambia Fergus Cochrane-Dyet has also expressed concern over Zambia’s rising debt levels.
Commenting on the country’s debt position, GBM, who is UPND vice-president, said even those who support and supported President Edgar Lungu in 2016 would be affected indirectly or directly by the levels of Zambia’s debts.
“Zambians should brace for hard economic times ahead under the PF government. We should all brace for the worst economy since 1964, it’s not only managing the current debt but even the credits from 2015 to 2016, all these have to be paid. It’s a sad situation for Zambians and the worst is yet to come,”
He said the PF had resorted to unprecedented developmental projects all in an effort to get some kick-backs from the contractors.
“We have no choice but to fulfil the obligations to the debts, the next government, which will surely be that of the UPND, will have to pay. We shall not be happy, but we have to pay. We are certainly coming to power but we have to face the challenges of repaying the loans,” said GBM.
“We will make a lot of changes to the economy which is now unsustainable under the PF. The consoling thing is that the current team we have in the UPND consists of people who are likely to make changes to the economic order of the country.