Zambia entering first stages of debt default – Musumali

COSMAS Musumali says it is by now apparent that Zambia has one of the most reckless and clueless governments on the African continent, in as far as macro-economic policy is concerned.

He says the PF government would rather default on debt payments than sacrifice votes for the sake of macro-economic stability.

Dr Musumali, an economist, is the Socialist Party general secretary and also vice-president.

He addressed journalists at the Socialist Party office in Kawama, Kitwe yesterday.

Dr Musumali addressed the plight of mine workers under Mopani and the government on-going shareholding acquisition negotiations.

Dr Musumali said the PF government has, within a short period of time, pushed Zambia’s debt to unsustainable levels, hopelessly seen the kwacha drastically depreciate and set the economy on an inflationary path.

He said as things stood today, “and of course using COVID-19 as a scapegoat,” Zambia was entering the first stages of debt default.

Dr Musumali said Zambia had three outstanding Eurobonds totalling $3 billion.

“Yesterday, the PF government launched a vote with its Eurobond. Holders, proposing to defer interest payments on these three dollar-denominated bonds until April 14, 2021,” Dr Musumali said. “This is supposed to be a first step to provide the country the necessary breathing time to create space for debt sustainability analysis and restructuring! In plain language, the country is unable to pay!”

He noted that: “if you are a mineworker at Mopani, your question will be, where is this government going to find money to buy the shares owned today by Glencore – the majority shareholding in Mopani?”

“Indeed the picture is gloomy: The PF government is clueless as to where the money for the first repayment of $750m Eurobond in September 2022 is going to come from,” Dr Musumali. “In July this year, the IMF completed a virtual mission to Zambia to discuss the country’s request for emergency support. We do not see this support forthcoming given the lukewarm, arrogant and corrupt path followed to date on fiscal policy and consolidation.”

With the 2021 general elections near, Dr Musumali said fiscal consolidation would mean losing votes.

“The experience of 2016 teaches us that the PF government will not sacrifice votes for the sake of macro-economic stability,” Dr Musumali noted.

“They would rather default on debt payments and loose access to the international finance markets than surrender their parasitic hold on the taxpayer’s money.”

On the plight of the workers, Dr Musumali pointed out that since Mopani was placed under care and maintenance, “we have about 9,000 workers that are without employment.”

“Their families are today enduring extreme hardships and poverty. The government has paid lip services to their plight – but nothing much beyond that,” he regretted. “We have another 11,000 employees serving under contractors. Their situation is also becoming acute by the day. Pay cuts are not uncommon. Then we have about 6,000 direct employees under Mopani whose future is now uncertain.”

Dr Musumali said Glencore was not investing in its Zambian assets anymore.

“The operations have to sustain themselves. Under this context, the services to employees have been drastically curtailed. This is often done without consultations and warning.” Dr Musumali said.

“Similarly, the negotiations between government and Glencore have to date excluded management and workers. The mineworkers are once more, like during the privatisation process, treated as collateral damage not worthy consulting.”

He lamented that a crooked multinational corporation and a corrupt, clueless, government were deciding upon the future of workers.

“This is the real plight of the workers. The workers are not on the negotiating table. They are not appreciated. These negotiations are therefore not about them. Quite to the contrary, they are against them,” said Dr Musumali.

Meanwhile, Dr Musumali, on workers’ demands, noted that she Socialist Party, in its understanding, as a workers’ party, demanded some issues.

“All workers should be paid their outstanding dues and benefits upon ZCCM-IH taking over majority shareholding from Glencore,” said Dr Musumali. “No workers’ dues and benefits should be held in trust for the workers. Former employees of ZCCM under Mukuba Pension Scheme would also need to be paid out what is owed to them.”

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