Zambia’s total debt will swell to over US$24 billion in three years-Musokotwane

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MMD Liuwa Member of Parliament Situmbeko Musokotwane
Former Finance Minister and now UPND Liuwa Member of Parliament Situmbeko Musokotwane

Zambia’s Former Finance Minister Dr Situmbeko Musokotwane has projected that Zambia will have a total debt of $24.46 billion by 2021 if the current borrowing trends by the PF government continues.

Dr Musokotwane said the PF Government has been borrowing US $2.46 billion per annum which means that within a space of 5 years, the PF Government has borrowed the equivalent of US $12.29 billion.

He said the current borrowing trends will see the country’s debt levels ballooning to $24.46 billion by 2021, when the PF’s term of office comes to an end.

Dr Situmbeko who is also Chairman for Finance and Economic in the opposition UPND said this level of debt will imply an economic catastrophe for Zambia.

“This is why the IMF and local independent economists are calling on the government to scale down on borrowing. This is why the IMF are refusing to assist Zambia unless the government demonstrates credible commitment to slowing down on borrowing,” Dr Situmbeko stated.

“Let me present these facts from another perspective. In 2011 when the PF Government took office, Government used 17% of domestic revenues to service its debt. By 2014, this ratio had increased to 25% and by 2017, it increased further to 29%.  If the government does not scale back on new loans, the percentage of revenue allocated to debt servicing could even reach 40 percent over the next six years,” he predicted.

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31 COMMENTS

  1. What kind of crazy person borrows 110% of their poor house market value? Oh i forgot,that’s the PF that has been doing that since 2011.

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    • After reafing a statement when the pf tenure of office comes to an end then i realised its a political statement rather than professional.

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    • Drunkard as president, what did you voters expect?

      Lungu needs flushing out now.

      Other African countries are making progress, like Rwanda. But Zambia has a corrupt thief that is evil and impotent.

      People let us flush this devil away.

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    • SO what if it swells, let it quadruple its not your country Musokotwane

      You have NO legacy at all.

      Let it go

      Tanks

      BB2014,2016

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    • This statement is loop sided because it does not portray the real outcome. Especially from Doc, I find it disingenuous wanting to have another 2 minutes of fame.

      As your debt stock increases unless it’s being used for only consumption, if it goes towards infrastructure and other tangible assets, your asset base increases.

      As you pay down your liabilities even by increased margins, your GDP increases and so does your net worth. What have we been using our debt on?? Mostly infrastructure development!!!

      Much of this infrastructure with most of having zero or net revenues meaning these things are going to pay for themselves eventually through things like toll roads and other services.

      So, at the moment debt stock is high, revenues are lower but eventually we have a completely…

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    • Continued …

      So, at the moment debt stock is high, revenues are lower but eventually we have a completely reversed trend. And honestly, the IMF is a complete non-factor here.

      We have enough means to increase revenues and cover the $1.3B that’s needed for that. Margaret knows what to do about that and if not we will advise her accordingly.

      This business of talking like these are all sunk costs shows nothing but intellectual dishonesty or at best insults the smarts of the smart people of the Zambian Enterprise.

      It should stop … because Zambia Is Greater Than Any Single One Of Us ~ B R Mumba, Sr.

      Original Content, No Copyright Reserved.

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    • All this debt is being used to construct WHITE ELEPHANTS with no economic benefit to the country. The money didn’t even touch Zambia becoz contracts are being awarded to Chinese companies.
      Example of white elephants:-
      – the 2 Universities in Muchinga are incomplete & have not enrolled a single student. One new university is being planned for Luapula.
      – 42×42 Wheel-burrows & $288m ambulances
      – roads are already washed away yet they didn’t bring economic growth
      – KK international airport gobbled billions yet there are only 2 flights per day.
      – Chinese ZAF helicopters have been crashing almost on a monthly basis

      If the $23 Billion were invested in import substitution industries, this would have been a great impact on jobs, PAYE, GDP, Tax collection enough fund these white elephant…

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    • Musokotwane speaketh the truth, if thou can’t taketh what he sayeth with thy open mind.

      Please go forth and argueth with thy ancient forefathers from the 14th century.

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    • Mumba
      What you are trying to elaborate would be true if things are normal and unfortunately in Zambia they are not. A road which is costed for a lifespan of 20years but done for a lifespan of 2 or even 5 years does not need a rocket scientist to know that we are in for a long ride.

      So you will need to borrow more to repair that road before you benefit from it. As the debt levels start chocking you and none can lend you unless at a premium, you ignore repairs and the cycle begins again.

      If a lender denies you money it is because you are at risk of defaulting.

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    • @Maloza, its very clear that you use bus when travelling to Joburg. If Ndola airport can hand up to 6 flights in a day what of Lusaka. The problem with you potholed brains is that you have so much hatred for the ruling Government to an extent of blinding you. Zambia shall rise again at the pace things are going.

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    • Road tolls will not recoup the costs of building those roads but will probably pay for maintenance……i think a balance needed to be meet between infrastructure for population enhancement and infrastructure that would create immediate returns to the economy…

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    • Zambian Government is like a home with No source of Finance but borrowing from neighbors. We have lost it as a country. We produce nothing yet we want to spend beyond our capacity. Lungu has no simple strategy to improve the economy. My question to Zambians, how did he pass his Law degree??

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  2. The trouble with PF and their Zambians is Financial indiscipline and China is just making a bad situation worse! When the Chinese give you money or build you this or that, it does not mean they love you! They are looking for raw materials to feed their thirsty economy! They build roads and rail to be able to transport your Mukula and other raw materials! We must wise up and learn to differentiate between needs and wants! Needs are limited but wants are unlimited and there will never be a time when we satisfy all our wants! China will not stop giving us money and because we are stup!d, we think we can go on borrowing. It’s time we instituted a serious Forensic audit into the dubious dealings between AVIC and Plot 1! There is something ratty and fishy going on and Zambians should wake up!

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  3. Despite being minister and lawyer, lungu survived on kaloba.
    Now that his president he thinks Zambia as well can survive on loans.
    Foolish people think kaloba is free money until paying back time.
    Our president has a small mind, suits can’t disguise ubututu in lungu.
    The man is a failure. He stole from a client what can stop him from stealing from government coffers through development projects like roads. Why can’t they renovate UTH, why only roads. The answer is simoke, that’s where more kick backs are made. This is a president on siege, he has to continue feeding his corrupt money sponsors and minions other wise kusopoloka.

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  4. Despite being minister and lawyer, ECL survived on kaloba.
    Now that his president he thinks Zambia as well can survive on loans.
    F**lish people think kaloba is free money until paying back time.
    Our president has a small mind, suits can’t disguise ubututu in lungu.
    The man is a failure. He stole from a client what can stop him from stealing from government coffers through development projects like roads. Why can’t they renovate UTH, why only roads. The answer is simple, that’s where more kick backs are made.

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  5. They build nice road for loafers to walk and drive on…..they build universities but there are no jobs……if only $7 billion was put into value addition of exports and other manufacturing and assembly plants , Zambia would have by now have enviable levels of employment and exports……

    A truly lost chance to create wealth. We were told investors will come flooding in when we build roads at $1million/km …..nothing …..now to maintain those roads you have to tax the few who work and drive mercilessly

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    • Ba Spaka: $7bn into value addition-you wanted govt. to nationalise or bulid industries that would have started draining the treasury again??? Even the Chinese govt. didn’t build factories, it was its people. In Mwanawasa’s supposedly economic prosperity, mothers gave birth on dirty floors in a congested UTH. Today they go to nearby Level 1 hospitals which are clean, have medicines and staff, UTH is empty and is now a hub of specialists. Money wasted???? Enviable employment levels??? Have you bothered to study the informal sector that is now the largest employer in Zambia, far outstripping the formal sector?? Then, roads will now be maintained by the levies collected by Road Tolls, didn’t you know????

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    • Yes if only 7 billion of that borrowed money was put into manufacturing…..you see the west today, they have not got to where they are by leaving everything to the private sector…..the governments were heavily involved in creating manufacturing industries , the problem is pf think everything is up to the private sector.

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    • Citizen….

      “….Have you bothered to study the informal sector that is now the largest employer in Zambia,..”

      Onani aba…..selling talk time ati the largest employer ??

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  6. When Musokotwane was Finance Minister under MMD which ruled us for 20 years, Zambia never witnessed any meaningful infrastructure development yet the country a contracted huge financial debt, now where did Mr. Musokotwane take that money? And now these are the same people who want to come and even take Zambia backwards and stagnant its growth, the world has changed and if you cant develop fast enough, you shall forever remain complaining. Have you seen the US infrastructure proposal? 1.5 Trillion Dollars, why? And do think America wont borrow to support their ambitious infrastructure program? HH and UPND is too bitter and thats why they dont think before they talk.
    The basic economic principal is that there is no entity that is not indebted, and when you borrow for growth, for activities…

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    • “….Have you seen the US infrastructure proposal? 1.5 Trillion Dollars,…”

      Did you also mention the US is a manufacturing and export super power ??

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    • No body is saying it is wrong to borrow for infrastructure , what we have been saying is let’s invest in industries that will give meaningfully employment , not employment of selling talk time, but manufacturing employment so we start exporting and cut on imports. The money generated can then be ploughed back into infrastructure

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  7. Malinso. Let me explain it to you slowly.

    Trump has an infrastructure plan for 1,5t US Dollars. He is borrowing in his own currency. As long as there is ink and paper in this world, he can never default in repaying US$ debt. Even Mugabe printed and paid off his Zimbo dollar debt. No problemo.

    On the other hand. Zambia is not borrowing in Kwacha. It is borrowing in other peoples money. You harness other peoples money, you have to sell them goods, get paid in their currency, and then use the profit to pay them back. Are you aware of any goods that GRZ exports to earn US$ ?

    Got the difference ?

    The crucial point is that BOZ cannot print US$.

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  8. The second point is that the US$ is the worlds reserve currency. This is based on the global superpower status of the US military infrastructure. Unchallenged !!

    Your BOZ reserves are not on Cairo Road, they are invested in US Govt bonds. China, Saudi Arabia, Japan, Russia, India and almost every country in the world hold their central bank reserves in US$.

    The trillions of US$ that central banks worldwide hold are invested into US Govt bonds.

    So as central bank reserves grow, Trump has an unlimited supply of US$ that central banks worldwide park in his Govt bonds.

    Your Kwacha is not in that position. You know any central bank that holds Kwacha in their reserves ?

    Stop comparing to Trump !!

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    • well said.many zambians are educated fools.i dont know whats wrong with BR MUMBA lately his comments are based on american economic policies but thats not how zambia s pf operate.

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  9. Third point :

    On Bloomberg today, US is being charged 2,2% on its Government borrowings (bonds).

    Per BOZ website, GRZ is paying almost 20% on its bonds.

    When Trump borrows there is a good likelihood his projects might generate a 2,2% return to pay his interest bill.

    Will GRZ infrastructure earn 20% every year just to pay interest ?

    Musokotwanes point is that out of every K100 GRZ is collecting in taxes K29 is going into interest.

    At the current trajectory K40 out of every K100 GRZ collects will go into debt interest, forget about the loan repayment, this is just interest.

    You getting musokotwanes point ??

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