Thursday, March 28, 2024

Zambia’s National Debt will be Unsustainable -UPND

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Debt

The revelations by Finance Minister Alexander Chikwanda that Zambia’s foreign debt is now a staggering US$4.7 billion while the local debt is at K24 billion, means the country under the PF leadership is technically bankrupt.

Our simple calculations indicate that US$4.7 billion at the current exchange rates averaging US$1 to K6.2 gives us about K30 billion foreign debt and now add that with K24 billion domestic debt, it gives us close to K55 billion in debt.

This year’s budget is ZMK46.7 billion meaning Chikwanda has put the country into more debt than the entire national budget and confirms this country is now totally bankrupt.

If PF government with Chikwanda as Finance Minister was a company, it should by now be going through liquidation and put under receivership as it would no longer be a viable entity. In other words, it would be insolvent.

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If PF government with Chikwanda as Finance Minister was a company, it should by now be going through liquidation and put under receivership as it would no longer be a viable entity.

 

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And yet we all know the painful path that this country went through in begging for debt forgiveness and write-off under the Jubilee 2000 campaign over money borrowed by the UNIP government over a period of 27 years.

As a country, we thought it was recklessness for Kaunda and UNIP to have accumulated US$7billion debt but it has taken Michael Sata and Alexander Chikwanda only 3 years to hit close to US$5 billion foreign debt.

Imagine how indebted Zambia will be if PF are to be granted a second term in office with this appetite for borrowing due to their failure to generate resources locally from mines and manufacturing sectors?

This level of recklessness also reinforces our calls for a new people driven constitution that will strengthen parliamentary oversight on checking and approving loans being contracted by the Zambian government and how borrowed resources are being utilised. In other words there will be no loan without a business plan.

When Zambian people call on the Finance Minister to introduce windfall taxes on mines so as to generate more resources locally, they are being called lunatics.

Surely Zambians are clever enough to judge who is a lunatic between the person failing to locally generate resources but opts to borrow and runs the country into bankruptcy and ourselves who are calling for introduction of revenue measures that generate resources locally instead of resorting to consigning future generations into another debt burden.

The PF government removed key fuel and mealie meal subsidies on the pretext that they wanted to generate resources for infrastructure development, yet even with the removal of subsidies, they have gone over-board in contracting a debt.

So where are the savings from the removal of subsidies that have so far pushed the cost of living far beyond the reach of majority Zambians?

It is now clear that both the borrowed resources and savings from subsidies are just benefiting a few within government who are corruptly getting contracts since majority Zambians are not getting any benefits.

Its even sad and shameful that even with this debt mountain being accrued and the removal of subsidies, the PF is failing to fund hospitals, bursaries for our poor children, and other social sectors.

By Kenny Ng’ona
UPND Youth Leader

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UPND Information (PI Dept)

29 COMMENTS

    • Ba Mushota, are you sure there is nothing wrong with the picture that has just been explained above. Please, lets behave like human beings not apes that lived in ituri rain forests 100 years ago. sorry to say this but I find your reasoning to be very upsurd and upside down. I wonder how old you are?????

    • IT IS VERY UNFORTUNATE TO HAVE PEOPLE IN SOCIETY WHO THINK LIKE YOU OR MAY BE YOU DON’T KNOW WHAT YOU ARE TALKING ABOUT.

    • this is madness of the highest order,how do you copy this evil happening in zimbabwe to zambia.you borrow without thinking then you compare yourself to a failed state,is the this normal.

  1. We acknowledge that the debt of K55 billion is too much but there is no direct correlation between the annual budget and the current debt. The debt could be for a period of 10 to 20 years so the best analysis is to tell us what the debt repayment will be in 2015 compared to the budget for 2015.

    • @point you dull and useless. Let me give you a simple example. Lets take It that your salary k15,000:00 knowing very well that you have big family you go to the bank and borrow k300,000:00 with a monthly instalment of k15,000:00.The loan you invest it in long term venture. Take home is zero and you are told that the money you invested may not give you a profit because of corruption by those you have in trusted with your funds to invest on your behalf .Your children require school fees, uniforms, hospital bills and food.Can a normal person call you wise let alone your wife and children.Thats what Chikwanda is doing.

    • @ Sido Mark
      You need some education

      The statement I referred is this – “This year’s budget is ZMK46.7 billion meaning Chikwanda has put the country into more debt (K55 billion) than the entire national budget and confirms this country is now totally bankrupt.”

      Taking your useless example of borrowing from the bank K300,000 while earning only K15,000 per month does not make one automatically bankrupt. You need to know loan period and interest to know whether one is bankrupt in your scenario.

      You can’t just say “budget less Total debt equal negative” therefore bankruptcy. Debt on a national level is compared to GDP to determine how geared the country is.

    • Just so you know how debt works. The nearly US$5B debt by 2015 will be nearly twice that current value. We pay interest on the debt and if we manage to repay in the period of time we may have paid back twice or more what we got. If you do not understand go and get a loan now for a period of time at a give interest rate and see where you will be at the end of that period. We are heading for default Sir, and your thinking is akin of someone spending today so that your children starve 10 – 15 yrs down the road. Does not require rocket science, spend what what you can afford within your means and not borrow with the hope to pay back! For your own info, every day the said loan inches up, and downward with the current managers of the Zambian economy. So your time issue, just digs into deeper mes

  2. We will pay back dont you worry.

    If you borrow and use the money wisely and for the benefit of the country and its citizens……………..it is well. We need to develop this country. It is lagging behind in so many things……etc, infrastructure and good roads.

    If its going into peoples pockets, then it is not doing us any good.

    We have seen the development and we will be able to appreciate this for many years to come

    • @Sister; you havd seen the development. But you haven’t seen the audited accounts of the said projects. As a people we are too accepting. The Roads Authority moved to State House and the projects are not audited and just because you have seen a few hundred kilometers of roads done and another 1000Km of roads patched up and that in itself to make people satisfied. If those books were opend up for scrutiny then professionals/consultants in those areas will confirm if the expenditure correlates with the infrastructural development. WIthout that, one has no basis to match expenditure with development. We need to be more proactive and demand transparency from govt.

    • Unfortunately PF is not spending the money wisely. If it was , Farmers, would have been paid, students’ bursary would have been funded, there would be no delays in paying the armed forces their salaries and allowances.

      Now PF has been told by IMF and world bank to stop all these unplanned constructions if it wants IMF to fund its unrealistic budget.

      Right now the people on the Copper belt are rioting because PF has neglected them in preference for roads construction. PF was not voted for in power to neglect the cost of living and standard of living in preference for construction NO.

      More riots are on the way and will soon spread across Zambia because very soon PF will fail honour salary payments.

      Chizavivuka mangemange!

  3. Ba LT can we please have summaries of the post budget discussions by ZICA and EAZ not what every Jim and Jack in the streets thinks about the budget without critically analysing it.

  4. Every one knows debt is not good even at household level if you are owing someone money you are never at peace. So to have such a huge debt hanging over the country in a year of jubilee is a disservice to the nation. I an appealing to the Authority, Government and Ministry of Finance to reduce on both international and local debts 55 billion kwacha is very bid debt. God help us to realize in this year of Jubilee our inheritance. I was happy to hear the government has realized this no more new road contracts until current running ones are cleared. well done guys.I wish Sata can reduce his deputy minsters to one in each ministry, however separate the 2 ministry- Education and sciences technology. ministry of Agriculture with Ministry of livestock and fisheries. Thank you. happy Jubilee zeds

  5. What sort of economics are you talking about. If you look at the US debt you would have given up hope. What is debt? To some of you it is always negative but to others it is an opportunity or leverage to finance projects. What you require is to manage the debt. Quit complaining because there a supply and demand side of economics, which side are you on???
    Do you understand why we have B+ rating among other things, take an acid ratio and prove me wrong. Without communication infrastructure we are doomed. Only these guys are investing to open up the country so that the cost of doing business will become cheaper and easier. More roads PF More roads PF. Viva ABC …

    • Gift you are missing the point. We are not saying don’t borrow or that Road construction is Bad. what we are saying is that PF was supposed to generate income through domestic tax and borrow reasonably and ensure that corruption in road construction is reduced so that good roads are built corresponding to the amount of money spent. Its not about spending only but the value of the roads as well. In other countries Governments have engaged private sector to build roads and charge through toll gates, this ultimately reduces corruption and reduces the burden on government but improves better service delivery to communities involved because they have a say,they want see were there money is going.The reason why PF has embarked on massive infrastructure construction is to get kick backs and…

  6. UPND has no plan for this country thats why they insult or oppose all the time. where is loadsheding? Did MMD leav money for Zambia railways,new roads,NCZ and universities? We shall pay and you will be ashamed

    • which country are you at for you not know that load shading is still there and for improvement in the generation of power,MMD should get credit for that not this paya student govt.

    • wisdom without wisdom.. which planet are you on.. M not MMD but atleast, they reduced the debt, we were self financing with magande at the helm, we had cheap mealie meal, fuel subsidy, growing economy, strong kwacha, fat eserve, $500m debt. so what the *** are you talking about. you numb head..stop provoking people. mind you the noose is still tightening, tamwakalande.

  7. Can UPND congratulate PF? if roads,schools, power stations and ZR were not worked on becoz they did not boro they would still say they have failed. Thanks wisdom we shall pay aftall no UPND member is benefiting from Zambia railways, roads and hospitals

  8. lets be part of the solution pipo with money open more companies or loan capital to those with good business plans so that evrone contribut to loan recovery. I miss Bwalya chiti

  9. Mushota whatever u call your, I know u are not woman but a useless man. coming to so called point, do understand the concept of time value of money. the K 55b Loan is current and the budget is for the next 12 month. in ten years time the loan will be worth k142.66b at 10% interest. So in all financial prudence the budget (especially income) must cover the loans.

  10. THE BEDTS ARE NOT $5bn BUT $8.9bn IN THREE YEARS, AM SURE CHIKWANDA HAS BEEN PROVED TO BE THE MOST USELESS MINISTER OF FINANCE ZAMBIA HAS EVER SEEN

  11. @sidomark please let expert do the analysis, your analysis leave much to be desired. GOVT NEED TO BORROW INORDER TO FINANCE VARIOUS PROJECT WHICH INTURN CREATS JOBS FOR THE CITIZENS AND ENCOURAGE PARTICIPATION BY LOCAL COMPANIES .

    • It is fair to say, all things built on debt depends on economic growth that generates income to pay back the loan AND to service those loans. If the economic climate fails(currently just announced yesterday, world economy is slowing down), then you crash. Can’t pay those loans back and investors want your airlines(remember Zambia Airways?). IMF tell you to abandon your Road projects and stick to those Roads that allow more foreign investors in.

      Pretty soon Chikwanda will be sitting under a tree with a harmonica or banjo singing blues songs, “oh Lordy, oh lord, oh where did it all go wrong?” And The Lord will answer, “Alex, those who live by debts alone, will perish at the hands of their creditors who will take all the labour of the debts.”

      Get wise, excessive Debt is WRONG.

  12. The PF Government has not over borrowed. Zambia’s current rebased economy is $25 billion and any national debt analysis has to be based on this figure. Our total debt is $7billion and so the debt to Gdp ratio is only 28%.A debt can only be classified unsustainable only when this ratio reaches 60% like is the case with Ghana. The cost of servicing $750 million and $1 billion euro bonds is $120 million or 0.5% of Gdp and even when other debts are included the total debt servicing cost is only $200million which is still less than 1% of Gdp . Zambia can only experience a debt burden when the total debt servicing cost as a ratio to Gdp increases from the current 0.8% to any ratio above 9%.The debate must centre on how the borrowed funds are being used and not whether we have over borrowed.

    • @zebron

      Correct as that is, we do have far too much focus on borrowing to manage our economy. We need to push for generation of Revenue from all our resources and business effort. We need to improve tax collection and add on taxable units.

  13. Debt is acquired on the ability to pay back, and its the GDP that determines how much you borrow, GDP= all the goods and services produced less expenditure.
    currently Zambia`s GDP is at $22 billion, those of you who are educated enuf , what percentage of that GDP is borrowed, hint ( DEBT divided by GDP)

    so debt is not related to a budget, a budget is an estimate of revenues and expenses, (debt is an expense and has to be factored into the budget) DEBT IS GOOD

    UPND, don`t be dunder heads, Zambia will repay all that debt easily

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