GOVERNMENT is determined to set up a sinking fund to refinance the Eurobonds despite concerns from the World Bank that the approach will not work following Zambia’s large fiscal deficits.
Government announced that it has set aside US$20 million for the refinancing of its three Eurobonds – the US$750 million, US$1 billion and US$1.25 billion – all falling due between 2022 and 2027 respectively.
But the World Bank said the sinking fund method to refinance Eurobonds will not work for Zambia due to its persistent large fiscal deficits which makes saving impossible.
Minister of Finance, Felix Mutati, however, said the sinking fund, to be established by law, would be set up as a sub account of control 99 where all Government revenue was kept.
“Government will still set up the sinking fund because it is by law and you cannot argue with the law. We will establish it because it is by law to keep the deficit neutral,
“It is a transit account that is used for repayment, it does not necessarily mean that funds will be locked in that account, it will be for the purposes of maintaining within our deficit parameters,” he said.
Mr. Mutati said in an interview that Government would be prudent to the extent that it did not keep money unutilised while incurring interest generated by the deficit. He disclosed that Government would next month establish a broad strategy which would assess the market for the Eurobonds.
Mr. Mutati emphasised that Government had multiple options to refinance the Eurobonds.
“Buying back is just one of the mechanism that we can do another mechanism will be to roll over so there are several options we have to address the Eurobonds, including finding money to pay,
“So there is no singular option to address the matter, there are multiple including domestic revenue enhancement. We do not have a bullet option, we have a combination of options to deal with the problem,” Mr. Mutati said.
Mr. Mutati said while considering all these options, Government would ensure prudent management.
THIS IS THE RIGHT thing to do.
We have borrowed but we are NOT Zimbabwe
We have good apples on top of the tree
We will be fine
Mutati with Lungu are part of the A Team
Thannks
BB2014.2016
You will discover rather too late, how difficult it is to change a negative image. Sinking fund or no sinking the World Bank will remain speculative, and that rightfully so.
The sooner PF realises that Lungu is a failed project and eject him by passing a vote of no confidence the better than stand a chance in 2021. At the current state of things and worse to come, 2021 will be another 1991 when KK was ejected.
Its hard to see what will be sold in 2021 which even the common man on the street has not seen through. ANC was told that Puma was a liability they never listened and the rest is history
PF has no capacity to manage an economy. Wake up Zambia!!
The investors in the world bank are the same with the same ones who invested in the Eurobond.
Failure to pay means the end of PF because these guys will make sure that PF is removed and replaced by credible leadership which will given IMF loans to pay back the money borrowed.
PF pay or you are out. Part of the money you borrowed belongs to the Italian and Russian mafias. These dont joke!
So we owe $3000 million and we set aside $20m annually. After 60 years we will have set aside enough to repay what we owe
Are the loans due in 60 years time ?
Horse Crap ! Trying to hoodwink the public into thinking repayments will be met and the debt burden is manageable !!!
Well well what a bunch of shameless fooools…how can you set up a sinking fund twice? What was Fossil Chikwanda setting up years ago. Anyway only a fellow thief can trust the likes of sly accountant Felix!!
The people have lost confidence in lungus GRZ , what ever pronouncements they make people see either more borrowing or corruption…..
Instead of ignoring public opinion on social media PF should have had educated people to help explain GRZ policies instead of the dunnderheads who blog for them who only know to insult HH and any one who questions them….
Pf and sunday chanda , your media team have failed you…….they only know insults , disband that group.
Ignore social media at your own peril PF…
Lack of financial discipline is PF’s undoing. They have allowed corruption to flow like water along the Zambezi river!
The blame lies squarely at lungus door…..mwanawase would never have tolerated this……
Surely what is $20 million when you borrowed close to $2 Billion…they are wasting $30 million to set up a uselesss national airline and buying 42 overpriced Fire trucks, Ambulances …put all that together you could have saved $100million
PF was only a bunch of hungry thugs before they became a government. They walked in with empty pockets, full of holes. The challenge has been to fill those pockets before sunset. That is what is taking its toll on the economy.
“Minister of Finance, Felix Mutati, however, said the sinking fund, to be established by law, would be set up as a sub account of control 99 where all Government revenue was kept.”
My foot. Which law does the PF Government respect? Do they respect the Public Finance Act? Do they respect Zambia Public Procurement Act? Do they respect the Anti-Corruption Act? Do they respect Anti-Money Laundering Act? Do they respect the FIC Act? Do they even respect Court decisions, take for instance the Concourt decision on former ministers?
What Mutati is saying is all crap. The Sinking Fund has been a non-starter since 2012. Refinancing is impossible without an IMF package.
Point of correction
It will take 150 years setting aside $20m to pay of $3000 million of eurobonds
As Mushotas A team knows they wont be around to face the music, so who cares ?
Chikwanda who contracted this debt is long gone. He loses no sleep over the repayment.
So will Mutati go.
Its the liability of the Zambian citizens to pay up the Eurobonds.
BTW at the time of contracting these loans we were told the GDP and profits that the “road contracts” would generate would be self financing to cover the loans. So how much has Tazara or NCZ or the other half completed projects generated so far ?
500,000 jobs to come !!!
Meanwhile captain coward who ascended to the throne riding on humbleness is clueless and now dealing with mutiny in his camp, as he watchs everything around him collapse.
Mushebwa iyile nachitindi kubuko
Sh1t will hit the ceiling in the year 2022!
Felix plans is useless, I see a crises.
We need to dump these ediots now!
Sir, shut up already. Who are you trying to sweet talk? You are always on planning stage when are you going start implementing?
Felix is kicking the Ball to whom it may concern in the year 2022.
In my view this issue is as seriously worse as it can be. Wake up Zambians we are in deep trouble.
Living beyond means
We developing Zambia and are doing fine. The alternative is a Paradise Parasite wanting to guritsa ziko.
That ka embassy job of yours is not permanent, you cant justify Sh1t like that.
Last silly joke of 2017, 20 million to refinance 3 billions (3,000 millions)!!!
Permanent Failures strike again?
I fail to understand Mutati. What’s this guy’s proffession, he literally is mincing over words like a bullet plan, multiple options and God knows what specific plan there is before he alludes to generalisation. Sinking fund of $20m when you you are committing to setting up a national airline that even the SA govt has failed tho it’s the second biggest economy in Africa with admirable credit worthiness. If you hear finance minister Gigaba of SA with his little experience in the position, he speaks clear, well informed tho the undoing is due to corruption and the GUPTAs. Eish Zambia awe.
Establishing a Sinking Fund for Debt Serving is a Noble Idea. However the Sinking Fund has to be funded out Govt Current Revenue. Current Govt Revenue Collection is not sufficient to finance Recurrent Expenditures (Civil Servants salaries and benefits) so how will the Sinking Fund be funded when the Treasury has an Annual Budget Deficit? The Sinking Fund wont have money to repay the Eurobonds on due dates. At this rate Zambia will certainly default on its external debt on due dates. Time will tell.
This guy is an accomplished clown, he thinks we are all clowns. Does he understand the term refinancing? ‘Refinance means finance (something) again, typically with new loans at a lower rate of interest’. Who in their right mind would give you a loan with this gross fiscal indiscipline? Zambian please brace yourselves for harder times ahead, and wake up from UTULO.
It’s getting nkongole twice to pay for the first one. Even a mishanga boy can understand that it’s unlikely to work because by the third time you come for nkongole all the lenders know by that time that you are one who will never pay