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.”