Mutati says Govt recognizes that Zambia’s debt risk has been revised from moderate to high

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Minister of Finance Felix Mutati.
Minister of Finance Felix Mutati.

Minister of Finance Felix Mutati has this afternoon left for the 2017 Annual Meetings of the IMF and the World Bank to be held in Washington DC, USA. On departure, the Minister made the following statement;

“The Government has made significant progress on the reforms outlined in the Economic Stabilisation and Growth Programme. The issues on which we have made progress so far are:

1. Undertaking to limit projects to those that require completion as reflected in the 2018 budget;

2. Action to restore fiscal prudence by embarking on reforms which enshrine fiscal management in law, including the review of the Public Finance Act, Public Procurement Act and the Bank of Zambia Act;

3. Further, presenting the Planning and Budgeting Bill for consideration by the current session of Parliament; and,

4. Debt reforms.

With regards to the outcome under Article 4, we recognise that our debt risk has been revised from moderate to high. Looking back, the Government’s own assessment of debt risk under the recently conducted debt sustainability analysis corroborates the assessment by the IMF.

Going forward, the Government is therefore defining a path for sustainable debt contraction as indicated in the newly published Medium Term Debt Strategy (MTDS). Further, the Government is moving ahead to enact a new Loans and Guarantees Authorisation Act in the current sitting of Parliament.

Further, Government has commenced the enhancement of capacity in debt management by restructuring the debt function in the Ministry to respond to the new challenges. New staffing and capacity development has also been embarked on.

The Government will, based on these policy reforms, be issuing directives on these matters to ensure clarity for the public. The Government will not slow its reform efforts aimed at reducing the fiscal deficit and slowing debt accumulation, whilst these discussions continue.

The 2018 budget for example, envisages a decline in the fiscal deficit from the projected 7.3% of GDP in 2017, to 6.1% of GDP in 2018. This is fundamental affirmation of the way debt management will be pursued. These policies, as stated earlier, are based on the Economic Stabilisation and Growth Programme (ESGP) and the 7th National Development Plan (7NDP).

I am pleased that the ESGP and the 7NDP have both been welcomed by IMF Board Members during the Article IV discussions. This is positive feedback and we should build on it. To put the status of the envisaged IMF Programme in context, our shedule in Washington DC will include deliberations on the next steps in engagement with the Fund. The discussions in Washington will be aimed at setting the next steps forward after which the public will be informed.

At the end of a roadmap that we will agree, and after the Board has considered the submission from the staff and the relevant office at the Fund, only then would we know whether the IMF Board has approved our program or not. So far, there are no indications that our programme will be rejected.

The next engagement, once agreed, will take into account the measures being undertaken on debt reforms; defining borrowing parameters and taking into account the outcome of the latest assessment under Article 4, the new Medium Term Expenditure Framework (MTEF) and the 2018 budget.

Note that, Cabinet in March 2017 authorized that Government engages the IMF in discussions to embark on an economic supported progrmme with the IMF. The Government and the IMF have thus engaged in discussions since April this year but more intensely in June when a mission visited Zambia.

The discussions in June were based on reforms Government has embarked on under the Economic Stabilisation and Growth Programme. The reforms included those undertaken in the different sectors including energy and agriculture and reforms in public finance management. These reforms have the aim of restoring fiscal prudence and addressing debt that the Government agrees is increasingly becoming strenuous.

These reforms also cover the strengthening of the legislative framework governing the financial sector, to ensure that it is more resilient and better supports economic growth.

40 COMMENTS

  1. +26
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    Mr.Mutati you are NOT TELLING US WHY the DEBT RISK has been REVISED FROM MODERATE TO RISKY?? WHY?? We have seen a AN INCREASE IN A NUMBER OF QUESTIONABLE EXPENDITURES AND CONTRACTS WHICH CERTAINLY A CHARACTERISTIC OF RISKY MANAGEMENT OF NATIONAL RESOURCES!! “Further, the Government is moving ahead to enact a new Loans and Guarantees Authorisation Act in the current sitting of Parliament”- WOULD THIS MEAN ANY FURTHER LOANS WILL REQUIRE PARLIAMENTARY APPROVAL? Let US HOPE SO!!

    • +12
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      That is the millionaire dollar question bwafyaa. He is not explaining anything merely giving a positive outlook on an otherwise bleak scenario. He needs town up the truth – what is the actual debt position? Why are we still borrowing when we are at high risk? Do we need to revise the budget and NDP to meet this new situation? Why do we have high expenditure?

    • +13
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      Okey, pepoz I knew where this whole thing was going, but I have to protect my job, my livelihood,
      it is after all more important than the economic status of the whole country,
      so please bear with me if I tell a few lies.

    • +10
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      vote

      I don’t understand this obsession with begging bow economics.

      You need to explain how the Euro bonds where squandered and then sit down and start being prudent with what you have already.

      To cut the story short you can’t be trusted with any more money.

    • +1
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      vote

      Two things come to mind: Either they are so incompetent that they don’t know how much we owe or they are criminals who are using a multitude of words to fool the gullible Zambians. I tend to lean towards both. Those that know are scared of the dangerous criminals who don’t care for our nation. ECL, Kampyongo, K Zulu, Amos Chanda, Madam Phiri, Jean Kapata, and Lusambo are all criminals.

    • +10
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      RB’s Project Mutati,we need figures of the actual debt.Don’t just give statements like you are only lecturing ECL with his Dununa reverse followers-like Kampyongo,Mumbi Phiri,Kamba,PF SG,and the general PF gullible members

    • +8
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      Mutati is a let down.Why allowing himself to sink this low,trying to shield the ECL/PF Corruption.Please give us the ACTUAL DEBT CONTRACTED BY THIS VISIONLESS PF REGIME.The huge debt has the potential to put your hoax national budget in disarray.

    • +50
      -22
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      Like I advised with earlier IMF article on LT, hold your breath & set your hate aside. Too much fake analysis & fake news in Zambia. Everyone is expert on everything. For better for worse discussions are still going with IMF as now confirmed by MoF. There is no rejection. In fact IMF makes very positive assessment of Zambian economy. We are doing well as a country despite prolonged discussions. Haven’t you seen price of goods, interest rates, etc coming down? Key infrastructure is being built. God is in control. Manufacturers of bad & fake news will be embarrassed. This is not about political party but Zambia. The Devil is a Lier. God Bless Zambia

    • +3
      -4
      vote

      I miss John Mwanakatwe, Alex Chikwanda (during his first term as finance minister during the KK days) and N’gandu Magande (during Mwanawasa’s term)! These guys were the best finance ministers the nation had.

    • +9
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      vote

      why do we have to wait for the IMF to TELL US how to run OUR own affairs? Has this information not been OFFERED FREELY by HH and everyone else except PF kaponyas(Kambwili, ECL, Chama, Mumbi etc)? Dull chaps 🙂

    • +10
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      Civil society and the public in general have for some time been warning government in very good faith about the level of foreign and domestic debt. The response from the Secretary to the Treasury Mr. Fredson Yamba and the Minister of Finance himself has been that Zambia’s debt was within sustainable limits and that there was no need to worry.
      With the turn of events where our debt has been pronounced as high risk (just before being pronounced Highly indebted), Mr Yamba and Mutati should resign on moral grounds for misleading the country and the President.If not the President should fire them. The culture of public officials making statements which they do not mean should end by imposing consequences. I know this is asking too much of Mr Lungu.

  2. +32
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    we are not foing anywhere with Lungu, let him die earlier we select a new president because he can’t resign it is un African.
    our future is blink with Lungu as a president, God help us on this one, we made a mistake

    • +6
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      Reuters – Zambia’s public debt is growing unsustainably, making the economy of Africa’s No. 2 copper producer vulnerable to market swings and reversals in capital flows, the International Monetary Fund (IMF) said on Tuesday.

      Publicly guaranteed debt increased from 36 percent of gross domestic product at the end of 2014 to 60 percent at end of 2016, it said.

      “Public debt has been rising at an unsustainable pace and has crowded out lending to the private sector and increased the vulnerability of the economy,” the Fund said in a statement after its executive board concluded consultations with Lusaka.

      “Directors expressed concern at the pace at which public debt, especially external debt, has increased and now put Zambia at high risk of debt distress. They commended the progress made…

    • +5
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      The IMF said while the government was committed to reducing its fiscal deficit from 9 percent of GDP in 2016, its cash deficit would remain “elevated” as government arrears were cleared.

      “Increased participation of foreign investors in the government securities market has eased the government’s financing constraint but has made the economy more vulnerable to swings in market sentiments and capital flow reversals.”

      The IMF forecast growth of 4 percent in 2017, slower than the government’s forecast of 4.3 percent.

      “Domestic risks to the outlook include delayed fiscal adjustment which would continue to crowd out credit to private sector and entrench an unsustainable debt situation, and unfavorable weather conditions which would affect hydro power generation and agricultural output,”…

    • +5
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      The IMF forecast growth of 4 percent in 2017, slower than the government’s forecast of 4.3 percent.

      “Domestic risks to the outlook include delayed fiscal adjustment which would continue to crowd out credit to private sector and entrench an unsustainable debt situation, and unfavorable weather conditions which would affect hydro power generation and agricultural output,” the Fund said.

      “External risks include tighter global financial conditions and volatility in the world copper price.”

  3. +1
    -36
    vote

    He said that we wait and see. I think that so far we have engaged very well with our partners in IMF. Obviously Hakambwili Hichishimba would not be amused with my comments……kikikikiki.

    Sorry I nearly forgot, UP.NDonkeys, I will come back for you.

  4. +8
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    vote

    “Before speaking, consult your inner-truth barometer, and resist the temptation to tell people only what they want to hear.” – Wayne W. Dyer

  5. +14
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    Dont make ****** out of us.

    The GRZ budget encompasses government income and expenditure, add on or subtract borrowings or loan repayments.

    Where did the Ndola dual carriageway fit into the Budget ? Nowhere !! It is classified as project finance, referred to as OFF/BALANCE SHEET. Its a project funded by China so both the incoming loan and expenditure on roadworks dont pass through govt coffers.

    Put all these off balance sheet items in your equation and then tell us your deficit is only 6,2% of GDP

  6. +8
    0
    vote

    The Debt has been revised from “moderate” the “Risky”? Just how risky and why? Why is Mutati not quantfying how the debt is risky? We hear the Lungu govt had underestimated the Debt Stock by $3.2 billion? This is the figure which the govt had comcealed from IMF. Mutati doesn’t admit that IMF cash bailout is not coming to Zambia becoz of several toxic issues. No respect for Rule of Law, Good Governance,Constitutionalism and Human Rights.No IMF Money.

  7. +12
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    Ba Mutati, is all talk and no foresight at all. Please stop sounding intelligent when you are just a pretender, the IMF statement is so damning to the country and this information was presented to you as far back as august, why you mislead the President, Parliament and the people of Zambia that all was well only you know. Neverless i have 3 questions for you aside from this IMF thing: (1) did the attorney general approve the intermarket bank transaction now under IDC; (2) did Cabinet approve the establishment of ZICB and use of workers money to be invested in the new bank; (3) did IDC board chaired by President Lungu approve the formation of ZICB, knowing very well that Dr. Lawrence Sikutwa was until recently part of the IDC board?

  8. 0
    -3
    vote

    That’s good though sound fiscal policy and economic strategy requires the stabilization of debt that will require more effort as you attempt to close the structural imbalance created between the revenues and expenditure Unless you stem that the debt levels risk climbing to unsustainable levels creating its own risks on the Zambian economy and the NDP prospects Once you address the fiscal imbalance you will have more space and flexibility to Invest wisely for the future in a robust manner Try to avoid any incidence or perception of management by crisis or want is often referred to us fiscal brinkmanship
    Setting the Debt ceiling or approvals is not also addressing the…

  9. 0
    -4
    vote

    Setting the Debt ceiling or approvals is not also addressing the issue of imbalances if the root cause as Kasaka would say is not addressed

  10. 0
    -34
    vote

    @2 LUSAKA , Ndiwe mwana wamfwiti , ndipo ufiti wako uzakupaya fast, ECL will live longer and GOD BLESS ECL AND ZAMBIA, he will follow the constitution and hand over power in 2026 to Harry Kalaba

    • +24
      0
      vote

      Acording to above contribution, it apears that geneticaly induced 1mbecility has taken strong foothold within PF suporters.

  11. +11
    0
    vote

    It looks as if our economy is being managed by some inexperienced roadside hawkers with no inkling of how int’l finance works,no insight into wise budgetary allocations or debt management.

  12. +20
    -1
    vote

    First let him explain how much has been spent on the useless Presidential travels that will be a good start before we get to the fire tenders, most corrupt Government Zambia has ever had!

  13. +1
    -32
    vote

    I understand that this morning Hakambwili Hichishimba, also known as Under5 or donkeylet, held a three hour press briefing at his home in Lusaka. Interestingly not even a reference by LT all day today, but then what can under5 talk about in three hours? Gibberish from the tenth minute to the end. You see, U5 is just mot a politician at all. If I were him I would ask my spokespersons or MPs like Mwiimbu and Nkombo to say all the nonsense and whenthings go sour, at least as U5 I would step in to “correct” withour appearing sill.y himself.

  14. +11
    0
    vote

    The IMF has revised the Debt figure from moderate to high becoz they discovered that the illegitimate Lungu govt had concealed $3.2 billion. On that basis and other toxic IMF cannot extend a loan to Zambia for now.

  15. +1
    0
    vote

    Will China continue to loan out money?
    So far, the data shows that the countries that receive China’s market-rate loans are not suffering economically, but they aren’t experiencing economic growth either. Researchers fear that could change in 10 or 15 years, when countries build up debts because they can’t repay the money they will owe to Beijing. At that point, China might have to rethink things.
    “They may very well 10 years from now, or 15 years from now, encounter the same problems that Western donors and creditors encountered when loans are not getting repaid,” Brad Parks explains. “If and when that point of reckoning occurs, then perhaps Beijing will revisit how it structures these loans.”(BBC)

    • +8
      0
      vote

      Great ministers in a certain era…there are young gems out there but since we have corrupt dull and insecure leaders…you can forget about them being appointed by Lazy unless they are hardcore drunkards like Mvunga!

  16. +15
    0
    vote

    Prudent Debt managerment… How do you not get the risk to high when the PF through corruption and ECL has been going abroad every week.
    where is this money going to come from… no wonder IMF are refusing to allow to bail out Zambia.

  17. +13
    0
    vote

    Moderate Debt Figure= $7.2 Billion
    High Debt Figure= $17.2 Billion. This includes $3.2 billion which had been concealed. The Lungu govt is a lying govt and therefore has No integrity. IMF has refused to lend a Cash Bailout to this illegitimate and Corrupt govt. This means that Zambia will next year onwards default payment on its Eurobond Loan.IMF has refused to refinance it due to the High Debt, Breakdown in Rule of Law, Rampant Corruption,Poor Governance, lack of respect for Constitutionalism and massive violations of Human Rights. Zambia under Dictator and Sadist Lungu is doomed.

  18. +5
    0
    vote

    Clueless baboons, just stop leakages in unaccounted, misappropriated funds and corruption then you don’t need to seek debts. PF has proved wasteful with the money they borrow, this time around no matter how good your promises on paper are not conning IMF.

  19. +8
    0
    vote

    If I was to point a finger this is all ripple effects from the damage caused by Alexander Chikwanda, probably the most inept and useless finance minister the world has seen.
    I was initially suspect of Mutati, but i now see the mess he is trying to clean up caused by his predecessor and at the same time take a nation forward.

    • +20
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      vote

      “Alexander Chikwanda, probably the most inept and useless finance minister the world has seen.”

      The only person in the whole of recorded history that has managed to BANKRUPT A COUNTRY – TWICE !!!

      Zambia has set a WORLD RECORD ! We gave a PROVEN ***** a SECOND CHANCE to do exactly the SAME THING AGAIN !?????

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