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Tuesday, July 7, 2020

Prof Saasa advises Government to heed IMF warning on Eurobond

Economy Prof Saasa advises Government to heed IMF warning on Eurobond

FORMER Zambia Railways Limited board vice chairperson Professor Oliver Saasa (right) flanked by Chairperson Mark Chona (middle) and board member Geoffrey Mulenga addresses journalists
Professor Oliver Saasa (right)
GOVERNMENT should heed the advice of the International Monetary Fund (IMF) not to refinance the US$2.8 billion Eurobonds at the moment until financial conditions on the market have eased, says Professor Oliver Saasa.

Government issued a US$750 million Eurobond in 2012, followed by a US$1 billion issue in 2014 and another worth US$1.25 billion last year, mainly for infrastructure projects.

The bonds will fall due in 2022, 2024 and 2025.

Economist Prof Saasa explained in an interview that financial conditions on the market were currently quite tight which posed a challenge to Government because it was expensive to repay a debt.

Prof Saasa explained that the global market was currently stressed especially after the United States of America raised its Federal Reserve’s rates by 0.25 percent.

“That was a timely advice and I hope the minister (of Finance) will take it while monitoring happenings on the global market to influence the decision and choices to be made.

“On Tuesday, the Federal Reserve Bank increased the interest rates by 0.25 percent which will make the dollar very attractive and this may lead to an appreciation because of the increased demand,” he said.

He said it was important for Government to be sensible about the current global macroeconomic fundamentals before making certain decisions.

“The financial markets are quite tight now which makes it a little bit of a challenge for Government. These are macroeconomic fundamentals at the global level that one should be sensible about.

“You also need to know that the IMF mission is about to come. The reason they shifted to early next year is because they have to see if the Budget will be approved by Parliament and then decide where they can propose to Government for possible adjustments,” he said.

Prof Saasa also said Zambia’s debt was carrying an overhang as it was more in excess of about US6.7 billion, most of which was in form of Eurobonds.

He also emphasised that more than 50 percent debt stock for Zambia was in the private sector.

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    • Euro-Bondage? So what’s the point of being independent from the British Empire on paper (1964)* and then being “Owned by the Europeans” fiscally?
      What did we achieve?

  1. timely advise Professor, but the issue is; will they listen to you?? Bondate, when the political strength of the country is left in the hands of the Kaponyas to decide its course, your wisdom becomes a threat to them. These are people who have lived through lies and propaganda to steal the credit and efforts of other people. For their convenience and greedy, they deliberately erased the history of your grand father’s contribution to the liberation struggle of Southern Africa,( King Lewanika), but only appreciated by South Africans and Mandela in particular. Shameless breed.

  2. They want another Eurobond to “refinance” so that they can continue stealing. The three Eurobonds were not enough for these greedy thugs!

  3. Abandon whatever you’re doing bo Saasa please and team up with the so-called failed PF administration for the betterment of your country, your home, your country and your pride. It’s not good “staying outside” as a learned professor in this economic field and only criticise the government of the day for it’s failures.

    Team up with them regardless of your political affiliations and fight/criticise from within the party. Once you do this bo Saasa, l shall equally team up with you sooner than later and save Zambia from total collapse. I must admit here that, unless we Zambians in diaspora move on quickly, these guys from these frozen parts of the world shall colonise us even more and for the worst.

  4. Investors in the Europe will not refinance even at higher interest rates without being assured that the Zambian Economy will grow and service and repay the bonds on due date. For investors to re-finance the debts they assurances from the likes IMF and other multi lateral Agencies that the Zambian economy will be managed prudently. Zambia needs to implement reforms for growth which will not happen in the absence of an IMF Programme. Such programmes require sound fiscal, monetary and Exchange Rate Policies as well as respect for Rule of Law, Human Rights and Good Governance which are absent at the moment. Edward will have stop violating the rights of Petitioners and hear the Petition without further delay. Edward will not get financial assistance from IMF without meeting their conditions…

  5. I don’t necessarily agree with our government big borrowing schemes… putting more financial stress on tax payers & future generation…have to say though if the market rates are lower than when the bond were issued, it makes sense to refinance and low your coupon payments. Current, this is the best time to refinance when rates are still at their lowest point…

  6. All diaspora skilled personnel must come up and form a political party to come rescue the situation. This time around even this tribal issue will not even be something to determine voting pattern, because i believe having lived abroad for years will have exposed many to appreciate how to live with other ethnic groups without feeling that one is special or superior above others. Can someone, please begin professional and academic profiling of all diaspora academics from all corners of the country in all the 10 provinces. Start now.

      Ala iwe! The Rats and Caterpillar eaters will NOT agree to that because most the big names in the Diaspora belong to North Western Rhodesia, the likes of Prof Michelo Hansungule, Prof Muna Ndulo, Prof Jonstone Haachilala, Dr John Chaambwa, etc
      In fact they even taught some of the thugs in the current govt including Lungu himself!

  7. @ Chilyata. Its better to try my friend. The tribal intolerance displayed these days will not help the future generation at all. Its better to try another formula to integrate the diversity of the country.


  9. So-called Prof. frustrated a well tested engineer in restructuring Zambia Railways. He did that for selfish reasons Actually, so he could benefit himself. Now there he is at the forefront of dishing out so-called advice. Zambians are not daft bo prof. You never worked in the real world bwana. Please shut up! That IMF you’re talking about has been at the forefront of destroying countries like Greece. The IMF told falsehoods about effects of Brexit. It was proved wrong about effects of the U.K not Joining the Euro. And there you are bwana prof reciting from the same verse of lies. We know you failed to become finance minister in the failed HH party but Could you please account for the effects of your interfernce in restructuring ZR?

  10. Saasa means rotten. How can a rotten thing become good? This is not dundumwezi gvt. Infact that profession you have is from kwahaye and kwa mongu. Hope you manage buying undewear to all your children ndaba economists too kaso. Nachi HH cikulu mutu kwati ni n’gombe yaku joko.

  11. Before independence most of our resources went to great Britain and Southern Rhodesia but our coffers were overflowing. These days after independence our resources no longer go to Zimbabwe and Britain but we are abjectly poor why?

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