Beyond the Obvious: to default or not to default

I WATCHED WITH keen interest Grevazio Zulu’s Sunday Interview where he featured finance minister Dr Bwalya Ng’andu as he tried to explain the country’s position after bondholders turned down our request to differ payment of the country’s debt owed to several multi-lateral and commercial lenders. Earlier in the day I was chatting with some colleagues after showing off my voter’s card and boasting that this will be my voice next year. A lot has happened in the last five years and elections next year will give us a chance to evaluate the performance of our leaders, hence the need for every one of us to register and vote.

I usually spend my Sunday afternoons reading and preparing my next article for the coming weekend and so I was happy that Grevazio helped me to have Dr Ng’andu as my topic this time around. The debt in question is the Eurobond, plus other monies from different lending institutions and commercial banks all over the world which the PF government has contracted over the few years they have been in power.

If my arithmetic serves me right, the PF government found about 3 billion US dollar debt when they took office in 2011 but this debt has soared to almost 12 billion, and that’s if they are telling us the truth.

First and foremost, I must commend Grevazio for the interview; he really has come of age cross-examining our leaders to answer to some of the issues affecting the people. And in this particular interview, Grevazio did a good job. Dr Ng’andu was asked to shed some light on the Euro-bond and how that Zambia will be the first African country to default on paying our debts on the backdrop of the coronavirus. And if we default, what does this mean to the country? It would mean that our credit rating will be down-graded such that our next borrowing would be very expensive because creditors will consider us as high risk. Alternatively vulture funds would take over our debt and make us pay through the nose. These are not good options, but of course the minister did what he‘s paid for; defending government for the mess everyone knows could have been avoided. We should not have been where we are if government listened to other voices outside their circles. But the minster was adamant and insisted that he was still working on other avenues to convince bondholders to agree to a debt suspension.

From where I was sitting, I could see that the learned minister had problems explaining the implications of the failed talks with bondholders and it downed on me that government will have a tough time to find money to pay civil servants and also provide the needed services in the social sector like education and health.

You must remember that sometime back government hired a French consulting company to help restructure our nkongole. And that was after many opposition parties and other interest groups had been advising government against unrestrained borrowing and spending money on overpriced projects, some of which are just given to their friends who promise to support them during elections.

But, like what Grevaziou hinted, how reckless have we been to accrue so much debt which is now suffocating us? Was this debt being contracted for political expediency and not for long term development? If we have borrowed so much money and put it in infrastructure development, why do we still have so much unemployment in the country? Why is our kwacha trading at K21 to one US dollar and our credit rating almost junky status? Where were all the government technocrats to advise on government borrowing and debt sustainability?

And where has all this borrowed money gone? Well, some people say the PF government has used the borrowed money wisely and has undertaken several infrastructure projects all over the country. The projects include roads, hospitals and health centers, housing stokes for the army and the police and other civil servants. Others include airports and hydropower stations that are meant to change the economic outlook of the country. These are some of the achievements the current government boasts about and according to them, these projects have employed thousands of youths and given prospects to several other spinoff job opportunities that have alleviated poverty and empowered people. Perhaps we can give them a benefit of the doubt and hang on hope that the loans will spur the country to economic growth and in the end pay off the debts.

So come 2021, the debt burden will still speak to us as we go to cast our votes and the questions above need to be answered. Thus we have two choices, either we give the PF another mandate to government the country and pay off the debt they contracted or give power to another party which will correct the mess. The choice is in your vote, and please make sure you register as a voter today.

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