Zambia Eurobond delegation
Zambia Eurobond delegation

Lusaka Economist Noel Nkoma has predicted that Zambia is likely to default on the repayments of its three Eurobonds when they fall due.

Mr Nkoma said the country’s economic future is very gloomy as all economic fundamentals are now in bad shape.

He also stated that Zambia may also struggle to make interest repayments on the Eurobonds which he said have become expensive.

Mr Nkoma said the country will also have to cut its social spending in the short to medium term in order to service the debt.

Mr Nkoma who is also former Economic Association of Zambia President was speaking when he featured on a live My Top Ten radio programme on Hot FM.

“It’s a gloomy picture, we haven’t managed fiscal policy that reflects of discipline and responds in a manner that addresses the challenges the country is facing,” Mr Nkoma said.

He added, “In the economic sense, the country is heading towards a very strong headwind.”

“I was saddened to read a report from the Standard Chartered Group which anticipates that the country might default on its first Eurobond repayments but for me I see us even defaulting on the second and third repayments.”

Mr Nkoma said the consequences of defaulting on the Eurobond repayments are too ghastly to contemplate at this stage.

He said even thinking of setting up a Sinking Fund is a bit too late because Zambia is living on borrowed funds.

“We are living on borrowed money and time, you only set up a Sinking Fund which is basically a saving fund and you only save if you have a surplus but where is that surplus going to come from?”

“Even for interest repayments, we may struggle to meet those. We will be forced to borrow from Tom to pay Peter.”

Mr Nkoma said there needs to be change of attitude in the way Zambia manages its fiscal policy which in turn drives monetary policy.

“We need to start implementing austerity measures right from the top. We are still so opulent and yet we have a huge deficit. Government need to set the tone first in implementing austerity.

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14 COMMENTS

    • hmmm, what kind of sorcery words are these that this man noel nkhoma speaks off. kikikiki, kuli abanensu in govt, this doesnt matter to them and it does not matter to some people also chikulu balelila bena. And yet they will say they love this country very much. Ati ifintu ni lungu na chikwanda? where is the love for our country ninshi? Ba zambia, try edith HH, then Edith nawakwi then nevers mumba in that order. lets change political parties after 5 years. the campaigns should all be based on 5 year plans. the 10+ year plans should be left as a special select committee in parliament which will comprise of 2 independent technocrats, two members from the governing party and two members from the leading opposition party. that way continuity will be there atleast.

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  1. Sad but very true. To those that cannot understand Noel’s point. The latest borrowing of 1.25 billion USD Eurobond in order to manage a budget deficit is living off borrowed funds and time. Secondly how do you save in a sinking fund when you are borrowing such colossal sums of Kaloba? Pama Fi must be VOTED OUT!

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  2. It doesn’t take an Economist to tell you this even a marketeer selling groundnuts outside Kabwata market can tell you that when you borrow to consume there is no chance of buying back especially with a visionless lazy empty tin at the helm who has never run anything successfully in his life.

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  3. Frightening but true. In typical PF mindset, the current Govt believes it can ‘create surplus fund’ by borrowing big from ‘B’ to pay ‘A’ and the remainder of the funds they are indirectly terming it as surplus. And then later they are borrowing even bigger from ‘C’ to pay ‘B’, and the bigger remainder they are calling it ‘more surplus’. Shocking but true. With this mindset, they are projecting into the future and starting a sinking fund from the ‘surplus’ they have just created. Frightening isn’t it? Gives a whole new meaning to the term ‘sinking fund’.

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    • Perhaps the term ‘Profit’ should be used instead of ‘Surplus’ to help these guys understand. Them maybe, just maybe they will see what is wrong with the false picture they have painted.

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  4. OUR DEBT STATUS HAS ATTAINED A TERRIFYING CRISIS, YET WE ARE ALL TAKING IT CASUALLY. IN SERIOUS COUNTRIES IT WOULD HAVE LEAD TO THE RESIGNATION OF GOVERNMENT AND THE HOLDING OF FRESH ELECTIONS TO ELECT CAPABLE LEADERS TO CORRECT THE SITUATION. IN ZAMBIA WE CONTINUE TO BURY OUR HEADS IN THE SAND WHILE PRETENDING THAT ALL IS OK. WE CONTINUE TO ACCEPT AND TOLERATE FOOLISH AND STUPID MEDIOCRITY FROM THE SO CALLED LEADERS WHO HAVE EMPTY HEADS AND HAVE NOTHING TO OFFER. WHEN WE SPEAK, WE DO SO WITH TIMIDITY LEST WE OFFEND “OUR GOD” SENT RULERS. IN OUR FOOLISHNESS AND STUPIDITY WE CONTINUE TO SHOWER PRAISES ON PEOPLE WHO ARE DESTROYING OUR COUNTRY AND MESSING UP OUR LIVES. WHAT A PATHETIC LOT WE ARE!
    FIRST AND FOREMOST WE MUST DEMAND FOR THE INEPT AND INCOMPETENT MINISTER OF FINANCE,…

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  5. Why should we have such a get, such a monster of finance. Then agafter n they are thking of borrowing. Will PF ever learn lessons. This will be really hard for HH to correct

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  6. What a bunch of criminals we have that call themselves “leaders”!!

    They have borrowed all this money and are going to run away before it is due to be repaid.

    It is perfectly clear to any person that has a even a mini brain that Zambia will never be able to repay this huge amount.

    “Might not be able to pay” is not even possible. We will make Greece and Argentina look like childrens play and Zambians will wallow in poverty for the next 50 years.

    This is Sata and Lungus legacy to Zambia.

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  7. Let’s also look at it from this angle, after doing all the major projects now with borrowed money, from 2017 to 2025 we slow down on these major projects and put that “excess” money in the sinking fund. What can stop us from repaying these euro bonds?

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    • All the “major projects” are just expenditures. What has Lungu and his PF told us about the other side of the balance sheet?? INCOME!

      Nothing! Why? Because they have no clue.

      Borrowing without a plan on how you will pay back the money is not only stupid and reckless, it is CRIMINAL!

      It is stealing our childrens future, condemning them to lives of poverty and disease. Working like slaves just to pay back the kaloba these swines have wasted and squandered on themselves.

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  8. If only we had Saviour Chibiya, Oliver Saasa, Lubinda Habazooka, Noel Nkoma, Mizinga Melu, Denny Kalyalya, Chibamba Kanyama, list endless handling our monetary & fiscal policy when we borrowed the first eurobond maybe we would be smiling now.
    But we relied on the fossil ABC.
    My point is cabinet should consist of professionals who are not MPs while parliament will provide oversight.
    Magande never behaved like a politician especially between 2002-2006 & the rest is history.

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