Article 63 (2) (d) of the Constitution, Cap 1 as amended by Act No: 2 of 2016 reads “The National Assembly shall oversee the performance of the executive functions by: – “approving public debt before it is contracted.”
There is no record in Parliament from 2016, 2017, 2018 or 2019 that any public debt (loans) was ever taken to Parliament for approval before they were contracted. This implies that all such loans contracted by government during this period are illegal.
On 21st September 2018, then finance minister Margaret Mwanakatwe giving a ministerial statement and answering a question from the Lukulu member of parliament said, “Lukulu’s member of parliament requested that this House oversees the debt contraction, Mr Speaker I don’t understand. I come to Parliament with a budget and all ceilings are agreed by this House. If there is a supplementary to be submitted, this House approves that supplementary. We have a very able Cabinet as well that approves all loans before it is contracted. So I think there is transparency and there is prudence in the manner in which we have contracted loans because collectively as a group of ministers, we scrutinise every single loan that comes into fruition”.
On 28th May 2019, Mwanakatwe at a press briefing said: “A Cabinet meeting held on Monday 27th May 2019 took note of the high level of debt service costs over the next three years compared with last year (2018). Government will cancel or delay approved projects…In doing so, projects that are of economic nature will not be cancelled as resumption of growth is important to address the economic challenges…This is not business as usual and tough times call for tough measures. Cabinet decided as follows: (1) Reaffirmed to indefinitely postpone the contraction of all new non-concessional loans in the intervening period; (2) To cancel some signed but undisbursed loans; (3) Increase the control and management of disbursements on foreign financed loans; and (4) Reduce the deficit to induce lending to the private sector. To this effect I was directed to present to Cabinet a list of loans to be considered for cancellation, postponement and slowdown for consideration.”
She said the urgent Cabinet meeting called by President Lungu was meant to get a full brief on the state of the economy and to decide on measures to be taken to restore the macroeconomic stability, restore debt sustainability and ensure that growth is restored on an upward trajectory for the benefit of Zambians.
The nation was told that Cabinet agreed that the fiscal deficit needs to be reduced to sustainable levels.
In July 2019, Mwanakatwe was fired.
On August 25, 2019, Minister of Finance Bwalya Ng’andu issued a statement in which he said the results of the Economic Stabilisation and Growth Programme (ESGP) remain on course in line with the country’s stabilisation and growth aspirations. And that the results of the registered progress will continue to be shared with the public on a quarterly basis.
Among the measures taken to register progress in the implementation of austerity measures is the stoppage of commercial loan contractions, re-scoping of existing non-critical projects by redesigning them in order to trim their estimated costs; and, the on-going identification and compilation of data on projects that will be stopped or postponed.
On February 12, 2020 Dr Ng’andu at his press briefing said, “In my address in July 2019, I indicated that the Ministry of Finance would engage different government ministries in order to agree on projects to be slowed down, re-scoped, cancelled, or postponed. We proceeded to undertake this process. The outcome of these consultations was a Cabinet memorandum which Cabinet considered on 20th December 2019. At its meeting, Cabinet directed that the following measures be undertaken:
a) A moratorium on contraction of external project loans
b) Cancellation of selected external project loans; and
c) Re-scoping of selected external loan financed projects in order to reduce the project cost, and ultimately reduce the undisbursed loan balance.
The moratorium on contraction of external project loans, will apply mainly on non-concessional financing. Regarding cancellation of selected external project loans, the external debt portfolio was extensively reduced and relevant stakeholders engaged to identify and assess already contracted project loans. These were then subjected to a re-scoping. The government is currently reviewing the legal ramifications of undertaking the debt re-profiling exercise and will subsequently engage with lenders and contractors. The reduction in the undisbursed debt by cancellation and re-scoping of selected project loans, coupled with the moratorium on project loan contraction, will contain the rise in the debt stock and position the country on a sustainable path. These measures are aimed at reducing the current undisbursed external debt of approximately US$7 billion by about US$5 billion”.
Dr Ng’andu hasn’t been fired yet, but if he does not deliver unbridled funding for projects before the next Presidential and General Elections, he may well be, because Edgar is quite accustomed to firing the messenger when the message remains the same.
Dr Ng’andu made it quite clear during the question and answer session during his press briefing when he alluded to “political survival”.
There is a serious trust deficit with the PF government. There is a serious crisis of confidence among the business community and donors. There are high levels of corruption and corruption deals in fertiliser, fuel procurement among others that remain uninvestigated. There are also illegalities in loan contraction and by which PF governs and mislead Zambians. The illustration of ministers of finance misleading Zambians is shocking. Who can you believe, Margaret Mwanakatwe or Dr Bwalya Ng’andu or neither of them? Who can the IMF believe?