Felix Mutati
Felix Mutati

Zambia won’t sell dollar debt in 2018 as it focuses on raising kwacha loans and increasing tax collection, Finance Minister Felix Mutati said.

The government plans to borrow 11.2 billion kwacha ($1.2 billion) from the domestic market next year, more than triple the amount in the 2017 budget.

This is part of its strategy to tilt funding in favor of the local market, after external debt bulged to $7.5 billion by mid-year from $2 billion at the end of 2011.

Africa’s second-biggest copper producer tapped the Eurobond market for $3 billion since then.

“When you look at the cost parameters of foreign-denominated instruments of borrowing and you add the exchange-rate risk, you find that you are better off borrowing on the local market,” Mr. Mutati said in an interview in Lusaka, the capital, on Thursday. The shift toward local borrowing is due to “purely issues of cost,” he said. 

Debt sustainability is at the core of Zambia’s discussions with the International Monetary Fund over a $1.3 billion loan and economic program.

As the government has continued to increase borrowing, debt-servicing costs have shot up.

The southern African nation will spend 27 percent of revenue next year, its biggest expenditure item, on paying back loans, according to the budget Mutati presented to lawmakers on September 29.

Ultimately, this should be reduced to about 20 percent, freeing up resources to invest in the economy, Mutati said.

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48 COMMENTS

  1. Where is the payment plan you fool…you are drowning the country in debt….#Bring back our $42 million…
    Corrupt government.

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  2. Is this man an economist???? Government borrowing from the domestic market will push up interest rates.. this in turn will hurt the local economy, push up cost of living etc….
    This is the first thing you learn in economics 101

    Its clear that the PF ship is sailing with a blind captain… when we told you that these EURO Bonds your are getting excited about will hurt you …. you laughed as off

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    • These FUULS have absolutely no clue on what they are doing. Interest rates will skyrocket to 50% or maybe even 100% ! Inflation will go the Zimbabwe way, and small businesses will go bankrupt at a rate that collapses the economy!

      They have killed the Kwacha with their borrowing. Is this the advice Lungu got from Mugabe?When are we going to see worthless “bond notes” here in Zambia?

      Levy Mwanawasa pulled Zambia out of the SH1T of debt and inflation. Chikwanda, Lungu and Mutati have thrown us right back in it! Just so they can steal the money.

      These thieves must rot in JAIL!

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    • On the flip side, Mutati is borrowing to liquidate the domestic arrears which as at December 2016 were K19 bn. He managed to reduce that to K13 bn. That one action, plus the easing of monetary policy will ease those Economics 101 pressures you have ably outlined. as a result, while domestic credit continues to contract, it could have been worse if he did not start clearing arrears. If there is something I have learnt, it is that economic theory does not follow that straight and narrow path you learnt in economics 101. That is why the Nobel Prize for Economics this year was given to Prof. Thaler, the father of behavioural economics, who was able to prove most of those theories you learnt in economics 101 wrong!

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    • I agree with you but f00ls like Mushota will always praise. He reminds me of PF radio callers like ChUUUfi and Elvis Nkandu…anything pro PF is always good for them

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    • It’s not by choice. The international community doesn’t want to lend them money because of carelessness.

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    • So Mutati, the IMF has turned you down? What did they say? No more globe trotting in expensive planes for Vasco de Lungu? Collect back the $20 million from Kampyongo that he stole from the Fire Trucks?

      Tell us about it. Maybe they just said HEAR THE PETITION FIRST before we give you any more money ???

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    • He is an accountant by profession…a fooolish one for that matter..he is merely in to buy time till 2021 then turn on these empty tins!!

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  3. President Lungu should fire Mutati, the man is not loyal and his inconsistency with economic policy is alarming. The man has single handedly introduced nationalisation of private sector companies. The repossession of intermarket bank is nationalisation whilst he is looting with Lawrence Sikutwa. How else can you explain putting NAPSA, Workers Compensation and IDC public money to fund madison’s acquisition of intermarket bank. Secondly, he has authorised IDC to acquire 90% shares Zampalm from Zambeef, honestly why takeover a project from the private sector that’s not even profitable yet, will GRZ make it profitable? Dr. Lawrence Sikutwa again engineered this transaction. Mutati is corrupt and needs to be taken to task.

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    • Fire Mutati by who? Lazy Lungu…really laughable..he will have to answer to RB who has the keys for Eastern Province.
      Lungu is just a mere tool for corruption.

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  4. Instead of highlighting solutions to our debt crisis you are busy announcing new methods of borrowing money…. Am not an economist but this sounds like crap. We are now going to be slaves in our own country because we know it’s the Chinese and Indian owned companies where you will get your “domestic loans” from. These chaps have no regard for employee well being and now that you will be owing them money employees complaints will never be heard. Anyway am going back to my village this December, am lined up for chieftaincy so good luck with the Mutati regime!

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  5. You guys are not serious. How much do you plan to borrow on our behalf? How are we going to service there debts?

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    • The sad part is they do it with pride and to add salt to injury they justify reckless expenditure even for borrowed money. Its like a breadwinner of house buying t-bones when he has just borrowed money because he is in debt.

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  6. How much tax did that guy who bought the famous fire trucks pay on his astronomical profit? We need to know!

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  7. kabs, you are correct. Madison Finance has over 10billion stuck in Intermarket Bank and this is a way for Lawrence Sikutwa to recover his money. So many Shenanigans in this government at the expense of the poor man on the street. Sad Indeed!

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  8. Who does not borrow? how much is America in debt? or how much has America been in debt. The question of concern should be borrowing for what? if it is borrowing for economic development yes we should borrow because then we are developing the economic capacity to handle a more developed economy. We have a finance minister who knows what he is doing.

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    • Its dumb shiiit like you that need slapping…would you seriously compare US to Zambia? Do you know what comes in and goes out.
      Wake up from your folly!!

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  9. This crass madness! We borrow to pay for inflated prices of fire engines – for monies that ended up in the pockets of the cabal of thieves and road contracts corruptly contracted. They continue to exhibit total disregard for the people of this country who they take for nincompoops! So much waste of national resources in this regime – no fiscal discipline at all!

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  10. Is there capacity to borrow KZ11 billion in the Domestic Capital Market? If there was domestic capacity that would push domestic interest rates to very high levels and the exchange between the Zambian Kwacha and the USD will skyrocket. Its a chicken and egg situation. The sooner the Debt Sustainability Assessment is done for Zambia the better. The Debt stock figure of $7.2 billion is false.

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  11. Borrow from HH ati he is rich.. so ninshi Bill Gates can buy Zambia ai? Olo ka mwaiche ka facebook… I think we have lots talented kids that can be creating $denomated wealth manje mentality yabu kawalala ya nyanya.. our kids want to be traffic cops ati thats were mane is.. we are an absolute shame. By the way can someone give me a list of top 10 Zambians with just $100mil cash that is genuinely made.. I add Costen Chilala

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  12. Can someone tell me which country in the world doesn’t have debts .
    Well the great America is the greatest borrower in this world; however it all depends who lends you money and how you Will pay it back.
    Borrowing locally is just the best however what we need is accountability of how the money is spent.
    Money borrowed for industry development is what Zambia needs most. Just as infrastructure is key to any development.

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    • COME ON, YOU BORROW TO GO AND BUY FIRE FIGHTERS AT TWICE THE MARKET VALUE. HOW MANY JOBS HAS £42M CREATED?

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  13. I knew that was the delay with the IMF, they wanted to gain extra more than required, it is this reason I believe mutatis strategy under the well abled leadership of his excellency ECL will not only promote our own source but will ensure money circulates within ourselves, great strategy, fusekeni ba IMF, nzelu monga HH. I’m breaker I’m transcendent and I approve this message

    #HHLIES

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  14. Does Mutati know what he is talking about? Are there savings that amount ro $11.2 billion in the domestic money market that can be borrowed to repay and service the Eurobond? Lets ho pe Mutati is not thinking of printing the Zambians Kwacha which is highly inflationary. Borrowing ZK 11.2 billion will sharply increase domestic interests rates and the Exchange Rate. Zambia will need to refinance the Eurobonds externally but becoz of mismanagement and corruption Foreign Financing will be difficult to arrange. With rampant Corruption in Zambia it will be difficult to access IMF Money. Becoz of lack of respect for Rule of Law,Good Governance,Constitutionalism, Human Rights compounded by rampant Corruption Foreign Financing will be difficult to attract to Zambia.

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  15. This is very contradictory. On one hand you are asking the banks to reduce lending rates so you can grow the SMEs and on another you are clouding out the private sector/SMEs by competing with the same SMEs for loans. You know clearly that government is regarded as a “good” borrower by banks and through the rule of speculation, the banks would rather withhold the money so they can lend to government as opposed to private sector/individuals.

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  16. The Game has now changed,,,
    after IMF refused to give them a loan bailout,they are now focusing on local funds!
    these guys never stop borrowing!!!

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  17. Because of this; Interest rates, inflation will rise and kwacha to depreciate against USD.

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Comments are closed.