GOVERNMENT should consider borrowing a concessional loan from multilateral partners to refinance the three Eurobonds and other sovereign loans acquired as debt servicing is choking the economy, says economist Lubinda Habazoka.
Dr Habazoka said in an interview that debt servicing was currently strangling the economy and limiting Government activities, hence the need to find new solutions to deal with it.
He explained that acquiring a concessional loan from multilateral partners such as China and Russia would help service the debt using the interest gained from it.
“If we want to normalise our economy so that it continues growing above 7 percent, we should refinance that debt, get a loan that it will start repaying after 10 to 15 years.
Dr Habazoka said such loans were possible and that Zambia would not be the first country to acquire them.
He explained that this would enable the economy to grow above 7 percent.
“Now such a loan cannot be acquired on the capital market because those loans will entail either by coupon payments or yearly interest rates if they are going to be syndicate loans, so we need to seek concessional loans.
“Such loans can be procured with an assumption that our economy is going to grow. What is choking our economy now is debt servicing which has slowed down Government activities as well as low metal prices,” he said.
He further explained that Zambia’s Gross Domestic Product (GDP) was likely to grow between US$50 and US$60 billion in the next 10 years if the refinancing of loans was done on good terms.
“The benefits are a lot, the next ten years we expect our GDP to be at least US$50 or US$60 billion, so such refinancing is a good idea.
“We do not have a sinking fund effective to a level that we are going to use our own resources to pay the debts; we will still need to borrow and this will be clever borrowing,” he said.
That concession loan will still be eaten by very few politicians whose main interest is enriching themselves, only Jesus’ coming will serve this country forget about Zambia ever being economically viable with people like big necked Chishimba Chimbwili
“DUNUNA REVERSE” Mulenya this time, You voted Ba “Kapala” and yet expect the national treasure to be secure.
The Zambians brought this upon themselves.
This is a UPND sympathiser talking. But intelligent as he is, he is suggesting solutions for his country and not criticising, he is very positive about the prospects of his country’s economy. But one thing that strikes me is that the man acknowledges that one of our major problems is low metal prices. Contrast that with HH who thinks that he can solve the problem.of low metals prices by bringing back Anglo American. Now that is a donkey insulting our collective intelligence, and effectively even insulting Habazuka. Did I say Habazuka is a UPND sympathiser? Correction, probably not any more, how can an intelligent young economist choose to remain a donkey? Hiho hiho hiho hiho
The message is not clear. How can a country (China or Russia) be a multilateral lender? They can only be bilateral lenders. A multilateral would be African Development Bank to World Bank. The greater point of refinancing a having sinking fund make sense.
I am sure the reporter either missed the point or the Dr was misquoted. China and Russia can only be bilateral unless those two can be talked to and give a single loan together, hence becoming Multilateral loan lenders. Which is a reserved title for IMF and world bank. Good catch One Zed.