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Alba Iulia
Sunday, January 19, 2020

Government looking at possibilities of refinancing the Eurobonds

Economy Government looking at possibilities of refinancing the Eurobonds

GOVERNMENT is looking at possibilities of refinancing the Eurobonds by borrowing although it is yet to decide whether it will issue another bond or look for other sources of finance.

Ministry of Finance permanent secretary in charge of budget and economic affairs Pamela Kabamba and chief economist – investments and debt management John Banda said this before a parliamentary committee on estimates in Lusaka yesterday.

Ms Kabamba said Government has since constituted a committee that will look at several options of refinancing the Eurobonds.

“There is a committee that is in place that is looking at the issue. So once they conclude the issue, we will be able to give a definite position on how we are going to move,” she said.

Ms Kabamba said the Eurobonds were necessary because the funds have been injected in infrastructure projects aimed at spurring development.

“The issuance of the bonds helped establish a pricing benchmark for future issuances for both the public and private sector…the country enhanced its visibility on the international investor market,” she said.

Mr Banda said several options are being weighed regarding the refinancing of the bonds with issuing another bond being one of the options.

“We want to issue another bond to pay off the debt and we will look for creditors that will lend on a low rate,” he said.

Government borrowed two sovereign bonds of US$750 million and US$1billion in 2012 and 2014, respectively to undertake several infrastructure projects.

Meanwhile, Ms Kabamba says Government plans to rationalise its expenditures citing the farmer input support programme (FISP) and funding to the Food Reserve Agency (FRA) as some of the areas which are contributing to the budget deficit.

Ms Kabamba said Government, on average, spends about K4 billion on FISP and maize marketing, which is a huge cost.

“We need to get rid of wasteful expenditures, for example, the issue of FISP is a thorn in the flesh.

There is need for Government to reduce participation on maize marketing and FISP and instead allow the private sector to be more involved in maize marketing,” she said.

“Money is always allocated for these programmes but we are always getting supplementary funds because the programmes always over-shoot the budget.”

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  1. Chimbwi no plan – putting many Zambians future at risk. You borrow money without thinking of how to repay the loans!! Thats how we got into the UD$7Billion debt trap

    • @Trial

      I concur with you on this one. PF will never remove the “Unchimbwi no plan Tag”.

      When ZWD said PF has finished the Euro bond and the government is broke, PF minions were saying Eurobond is still safe in a some bank account some where.

      Now the truth is slowly coming out by their admittance that PF will need to borrow more to service their debt.

      Debt cycling and transfer will just land Zambia into more sh1t worse than KK and his UNIP landed Zambia in 27 years.

      So if PF government is struggling to service the debt, then it means the wage freeze stays until further notice. More over, civil servants and most government workers will not be paid their salaries on time.

      PF is a failed project even under Lungu.

      Any way Zambians chose suffering under PF so let them…

    • With this information filtering through from PF government, I can safely predict that;

      Wage freeze or even wage cuts will be the order of the day under the PF.

      Major health and education institutions will be hugely under funded. Hospitals will have no medicine.

      Farmers will again this year be in a worse situation than last year because there will be no elections to push PF to pay farmers promptly.

      Debt is bound to reach $10billion by the year 2016.

      Rule of law will be worse.

      Civil servants , police and defence forces should forget getting their salaries on time.

      Government induced Kwacha devaluation to Zim level is eminent than ever to cover the costs of running the government.

      All in all Zambia is headed for bleak future.

      Mamamama! Zambians are in deep sh1t…

    • Dr. M was boasting that he is the one who arranged eurobonds. Engage him to get replacement and make millions more. Idi.otic PF government

    • Syndicate Loan to Zambian Airways (ZA)
      In August 2007, three financial institutions formed a syndicate agreement todisburse a five year loan to ZA to enable the Airline purchase two (2) aircrafts. Seetable below.Bank AmountUS$Amount
      K DBZ 1,500,000 6,075,000
      Investrust 500,000 2,025,000
      Intermarket 1,000,000 4,050,000
      Total 3,000,000 12,150,000
      The repayments by the Borrower (ZA) were to be made not later than five (5) yearsfrom the commencement date by way of twenty (20) quarterly instalments.As of 31st August 2009, only an amount of K1,243,195 had been repaid as interestcharges and as of December 2014, amounts totalling K17,744,034 inclusive of interest were still outstanding.

    • What happened to investing the funds in commercially viable Capital Investment projects so we could repay the liability? Who advises these people? About $5BN of domestic and foreign debt is no joke. As a matter of fact, at this point, these people deserve no sleep until this obligation is settled.
      We are no better than our ancestors who were taken into slavery to work in cotton fields to make the Western world what it is today.

  2. While people voted for PF so enjoy the poverty . Maybe lungu should to Zimbabwe and see uncle to borrow his millions he stole . RB stole money can’t lungu ask for some ? Maybe Henry Banda or William Banda has got millions so please ask from them .Willie nsanda steals money from RTSA can’t he ask from him ?

  3. Since independence we borrow money or since 1992 . Then why get independence if you can’t look after your own people . Then you were swearing at guy scott go back to your country Scotland but you keep asking money from Europe . While Scotland is in Europe and a member of EU . So good luck with your asking

  4. Banda said several options are being weighed regarding the refinancing of the bonds with issuing another bond being one of the options. “We want to issue another bond to pay off the debt & we will look for creditors that will lend on a low rate,” This is digging a bigger pit in order to fill another. How do you get a lower rate when the country’s credit rating is plummeting? This nonsensical Zambia problem is that of insolvency not liquidity. It is suicidal to adopt liquidity solutions for insolvency. It just snowballs the problem as you accumulate more unsustainable debt & become an economic basket case like Greece! Get a fair tax from the mines without throttling them 20% royalty is too high for low grade producers like Lumwana & kalumbila. 12% to 15% would be reasonable

  5. Very unfortunate position the country has found itself in. Hope ba Sata was alive to solve these problems he created for the country.

  6. How can u think of refinancing so soon? U have not even paid the first installment of the principal yet? This is pure chimbwi no plan. By the way only pipo from luapula, northern and muchinga have benefitted. Not one cent for northwestern and southern. How sillly!

    • @jamakudi,you seem to be speaking with facts against people from the provinces you have mentioned.Could you break down how the total of the US$1.750Bn Euro bond has benefited people from the 3 provinces other than the whole country? It was well publicized that the greater part of the bonds was to finance the power and transport sectors and we have seen these developments almost countrywide including Northwestern and Provinces. Road constructions(including bottom road),recapitalizing Zambia Railways,expanding power generation and distribution(including connecting all districts in NW to national grid).

    • @French Guy with Zambian wife,it is not African culture to live on credit.May be that is the culture you have seen in the family you have married from! In fact it is western culture to live on credit! Almost everything you get on credit for your sustenance! If you don’t live on credit why do you have a crisis in Greece,Spain and Portugal and what is the USA doing with its bonds which are dominated by money from China and the Middle East!? In fact Frenchguy, your country escapes the economic crises that engulf the Eurozone due to exploitative relationships it has forcibly maintained with its former colonies in West and Central Africa where it plunders natural resources and controls their economies! So French guy, keep your french lie to yourself,share it with the ignorant!!

  7. These Kaponyazi we keep in power will end up selling the country. We are going down the slavery route into serious debt. The P.F is a bunch of criminals who can not and don’t want to look back and see how long it took the country to liquidate the debt incurred by Alexander B. Chikwanda as finance in the Unip Government. How Lungu maintained this believer in Kaloba beats all those who have seen the inside of an economics class. We are going down the drain, I wonder where we will be in 18months time. Chimbwi No Plan indeed re-loaded.

  8. Lungu and Chikwanda are thieves from the same school. We voted for these animals who have no direction so why complain, you farmers, teachers and health workers tighten your short belts even more!

  9. Lungu and Chikwanda are thieves from the same school. We voted for these animals who have no direction so why complain, you farmers, teachers and health workers tighten your short belts even more!!

  10. Borrowing to pay a loan earlier borrowed.So for the rest of our lives we shall always be paying loans and making others richer while we get poorer.I hope I’m dreaming please wake me up! Another Eurobond please I’m dreaming am I?

  11. Ok let’s be frank. The purpose for refinancing a loan is primarily to reduce interest costs on the $1.7 billion bonds. At the time of their issuance copper prices were strong, fiscal balances were in better shape and copper production was approaching 1 million tones.

    Currently, copper prices are low, fiscal balances are wider and copper production in falling. Adding to that international investors are uncertain about performance in frontier market. In short, Zambia is more risky to an investor and interest cost will be higher.

    I see these PF guys looking to borrow $250 million buy “refinancing” through a $2 billion 10 year bond. More Kaloba in short.

  12. Before you even think of getting another one it will be wise to give a full audit of how the $1.7 billion bond has been used. As Zambians we should make sure that these guys are accountable because this is a lot of money and it will have a very negative effect on all of us, PF, MMD or UPND esp. our children and children’s children who will have to pay through their noses. No politics here, please our country is in big trouble and how are we going to pay back when the infrastructure we have invested in has not brought about any economic growth that can help us raise the funds we need to finance these bonds. Big trouble ahead.

  13. To all the zombies (the walking dead who do not think) who voted PF! Is this what you wanted for mother Zambia? You are more interested in seeing your fellow Kaponyas in government that let learned men with workable policies to run the country? We know you are dumb when you exhibit this tribal hatred for a man (HH) who could have help revive the Zambian economy! EL is not presidential material but kaponya material. You have sold the country down the river because these kaponyas will continue borrowing to enrich themselves!!

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