Zambia is facing tough questions over its foreign-debt levels from investors who think the real number may be more than double what the government has disclosed.
Lenders including Nomura Holdings Inc. believe the state has not completely come clean on its external debt.There is a growing concern Zambia may be headed for a similar situation to neighboring Mozambique, where hidden debts led to default as the government is seeking to restructure.
According to Peter Attard Montalto of Nomura International, “Zambia is in somewhat of a serious predicament of having politically connected additional ‘hidden’ loans”.
Officially, Zambia’s public debt in August 2017 stood at $ 12.45 billion, or 47% of gross domestic product.It has been the main stumbling block in securing a $1.3 billion loan from the International Monetary Fund due to doubts about its debt sustainability.
According to presidential spokesman Amos Chanda “Zambia will not go to the end of the world to pursue an IMF program, if not, it will continue with its own program, which is already producing results”.Still, Zambia is devising strategies to generate revenue internally.
That decision has led the tax administration to audit mining companies, hoping to rake in $ 7.9 billion.Authorities in February increased a liter of fuel to $ 1.41 cents.
Meanwhile, Investors are fretting that Zambia may have more debt than it’s let on have sent the nation’s Eurobonds tumbling.
Yields on the copper-producing country’s $1.25 billion amortizing bonds due in 2027 rose as much as 54 basis points, the most since February 2016, before paring the increase to 50 basis points by 4:35 p.m. in London.
At 8.45 percent, the yield was the highest in more than a year.
Banks including Nomura Holdings Inc. say the government may have greater tax liabilities than it’s made public.
That’s bad news for holders of Zambia’s dollar securities, which were already the worst performers in Africa year-to-date through the end of last week, losing 2.4 percent, according to the Bloomberg Barclays Emerging Markets USD Sovereign Bond Index.
The risk is that Zambian bondholders could find themselves in a similar situation as investors in Mozambique, where hidden debts led to default and the government is seeking to restructure.
Zambia has been in talks for several months with the International Monetary Fund about a $1.3 billion bailout, but the two sides have failed to strike a deal, partly because of the Washington-based lender’s concerns about foreign borrowings.
Finance Minister Margaret Mwanakatwe said on Friday she was carrying out a debt sustainability analysis to move the IMF negotiations forward and also wants to “reprofile” $3 billion of outstanding Eurobonds.
The nation is already restructuring bilateral loans from Chinese state companies.
Source:Bloomberg news
my heart bleeds for mother Zambia..
This is good news for zambia because the answers will be found in Zambia by Zambians.
When he proclaimed, “I AM VISIONLESS”, this is what the Malawian meant. Loans are a conduit which Lungu is using to steal.
Kaloba after Kaloba after Kaloba, nkongole after nkongole. Inshi you have no clue to grow the economy?
Then when the PF00Ls realise that they can’t repay the reckless loans, they introduce fake taxes on poor people
– Toll Roads
– Borehole Tax
– Heavy tax on Japanese 2nd hand cars
– K400 E-Voucher fees for farmers
– Health insurance Bill
– Tax on Rentals as if you helped me built my houses, Mxxxm, STYOPET MAKAKAs!!!
– Fuel levy
– TPIN for every bank account opened
– Tax on Western Union money transfers
– TV levy for DeadNBC
– Heavy Tax on mines
There is a bad spirit that wants to paint our country badly. It’s difficult for a country like Zambia to hide it’s debts as debt contraction is a public policy issue governed by law. Executive is also obliged to report country’s financial position before Parliament. How can a debt be hidden? Why not point out the missing debts from the report that is even available on the MoF website. It’s irresponsible & malicious for these accusations to continue like this. These debts have to be repaid from GRZ coffers & GRZ has to run this by Parliament through the budget every year. I think Nomura needs to be more responsible & query with facts rather than suspicion. We need to stand up for our country & reject this rumour mongering that drives the wrong sentiment about us. God Bless Zambia
The Chosen One
Right from the word go lungu was hiding borrowing……we all remember how the post exposed his borrowing of $167 million for the defence forces , lungu was very annoyed that that debt was exposed.
@Spaka, many Zambians will not doubt an accusation supported by facts & GRZ fails to respond. Have you looked @ comprehensive debt report on MoF website & can you say that $167m is missing? Do you even have facts that such loan was contracted & disbursed to Zambia & Zambia has included it for repayment? I’m afraid emotions will not help because no one wins but it’s us Zambians who lose because regardless of whatever govt is in power time & opportunities do not wait for anyone. Facts show that economic fundamentals for Zambia are good @ moment. Who do you think loses for scandalising your own country? God help us!
But this should not be mixed with the tax owed by FQM. It’s like the writers want to confuse the situation so that the culprits can cry foul. Debts or not tax must be collected.
Ba Chosen One, thats the whole point of the word ‘Hidden’, you will not find it pa MoF but when institutions start being skeptical it means they have done their research and have seen that something is amiss. We are going nowhere with PF and I question the mental faculties who still think Lungu and his clueless team actually have a plan apart from more taxes. Very sad.
The problem is which is a credible source of all our debts? MoF? from what i suspect, these organizations have gone to the source of the loans and gotten the figures. it is very easy to get figure from the one lends than one who borrows. asking Zambia how much they owe will not be helpful especially in this case where the country has to demonstrate that they don’t owe much. if today you asked the government to list all they owe for debt cancellation, then you would see the real figure.
Only a fooool would trust a fraudster like Lazy Lungu and crooks…imagine this Finance Minister has a case pending in court.
Margaret should not fall in the same trap of the IMF that Felix did … this is a non-starter for the smart people of the Zambian Enterprise. The key is to increase domestic revenues while at the same time immediately refinance the Eurobonds.
These two are the only ways forward, everything is gives control to others to force matters. Already 6% of GDP in deficit spending is one of the lowest we have had, a great sign that with more innovation, we can bring this thing totally under control.
We are on the right track and should remain focused otherwise we lose it. This is the most crucial time of Margaret’s tenure and it will be what will make or break her.
A steady hand, Margaret a steady hand is what you need right now … the widest consultations possible but at the end of the…
Continued …
A steady hand, Margaret, a steady hand is what you need right now … the widest consultations possible but at the end of the day you make the final decisions.
We are counting on you … God speed!!
You have my support.
Margret Mwanakatwe on IMF programme is economical with the reality of truth. She says “currently a debt sustainability exercise is on to give us current debt parameters that will provide a path for the nation going forward with IMF discussion”. To begin with, the nation has not been informed by PF government what level of agreements/disagreements IMF has provided to the nation. secondly, Zambians are not incapable of finding out what has happened with IMF discussions. Felix Mutati breathed so much hot hair that came to nothing.
Mwanakatwe’s mention of the current debt stock of $8.7 billion is highly questionable given conflicting numbers provided by IMF. As at now all discussions with IMF are on hold pending Zambia to clean its house.
Well, truth has long legs; lies have short legs. U may take illiterate educated zambians for a ride that the economy is good bla bla, but the investor? That is a different matter. The investor removes the political hogwash and zeros in on real issues of economic performance. Continue dancing that so and so has said zambia is #8 best economy in sh*thole and see where u end up.
@Mukuma, how can you treat a suspicion as truth? MoF has issued a report. Nomura needs to say which part of report is not accurate together with supporting facts. I think MoF needs to publicly challenge Nomura if they fail to do so in the next 7 days otherwise this is clear sabotage of our economy using innuendos simply because Nomura has a platform such as Bloomberg. Is Nomura interested in buying our bonds on the cheap & hence trying to play the market just because GRZ has announced a reprofiling? God help Zambia
Last time I indicated the same when an organization called quantum was talking about Zambia investor attractiveness we criticized some such which was now some PR issue with PF and its followers like BR Mumba blowing their trumpet and how some people were just hating? …… well the truth is hard to hide
The way I see it is that the total debt stock does not include Chinese stake. If this was included definitely the total stock will be more than double what is reported.
Exactly I was about to mention this. That $8.7bn mentioned is from the West which you can track as it goes directly to Treasury. Chinese money doesn’t, goes straight to the bank of China and holding Chinese companies. So it’s not a stretch that the debt is higher. All you have to do is count the number of projects from 2012, that will tell you that it’s above $12bn. It’s not about slander but the reality. Tax being imposed all of a sudden, is to raise revenue. If your biggest earner is still a commodity like Copper, with no industry then you have no safety net.
Borrowing is normal for almost all governments worldwide. You will be amazed at how much debt even countries like the US have. But the issue here is
1. sustainability
2. transparency
3. fiscal discipline
4. productive utilisation of the money you borrow
Sadly, on all these three items we are failing miserable.
With our economy and GDP so dependent on copper whose price or production is not in our power. it’s controlled by foreign forces.
There is zero transparency from government on the acquisition of loans. There is no discipline in how we spend borrowed money. Corruption reigns supreme in projects which are grossly overpriced. And we also spend borrowed money on luxuries.
You are a Christian country who can recite every verse in your Bible
“….That’s bad news for holders of Zambia’s dollar securities, which were already the worst performers in Africa year-to-date through the end of last week,..”
We were told how these were the best performing in Africa……just like the bweengwa kidnapping, the GBM training UPND comandos , the K5/l fuel after deals in Saudi , the brenhurst funding of UPND ….all lies , nothing but lies.
No sane person can trust PF and whatever they say….
PF is lead by a shameless crook with zero integrity and morals…..lungu. with him at the helm , every one is dishonest and a lier….with no shame….corruption is at its height in Zambia.
That is why lungu can never give an honest interview or press conference incase he incriminates himself or is asked difficult questions. That is the mark of a well versed crook. One who never answers any questions in front of camera..
From head to toe PF are proven Id1ots. They were cheating people that things are just ok, what are we seeing now. Matole yabo.
SOMEONE NEEDS TO RESIGN IMMEDIATELY
From head to toe all PF members are proven id1ots. They were cheating people that things are just ok! What are we seeing now. Lungu is one shameless adult who has no problem lying even when he knows the lie would be discovered the following day. It is very painful to see some f00ls still supporting the stealing and abuse of resources by this useless directionless man who only knows how to drink beer and commit adultery.
Hahahahaha, this is when some fuuls like Senior Citizen, and all those that pray Lungu and PF racketeers disappear. Zambia is literally on fire and the PF pin-heads cannot and will not solve these problems. They have no capabilities to understand what is happening and how to handle such complicated economic turnouts. Honestly, who in PF is capable to solve such problems? If the president was normal, I assure you he wouldn’t appoint uneducated people like Lusambo, Lubinda, Kapata, Vincent Mwale, Sichalwe, Kampyongo, Davies Chama, Simukoko, Freedom Sikazwe, Silvia Chalikosa, Kabanshi, Malanji, Matthew Nkhuwa, Richard Musukwa, and Michael Katambo as ministers. How do you run an enterprise of 15 million people and participants of over 2 billion people with a group of grade 12 graduates like…
a group of grade 12 graduates like this? Are we that stup!d as a nation? How do you expect these pin heads to even understand what national debt is? Come on Zambians, we can do better than this.
F00ls like BR Mumba must be benefiting big time from these id1ots in government! how else can one explain the reasoning of this basturd who knows clearly that something is amiss here but continues to defend the f00ls with all that he has. I hope c1kala you are making hay while the sun is still shining.
When Post newspaper realized that the amount they were owing ZRA was out of proportion, they resorted to discredit the government. Today FQM is owing ZRA they are involving others issues in order to avoid tax. How can a government avoid borrowing when big companies are avoiding paying tax and rich guys are externalising their funds? If you know where those debts are hidden then show us instead of speculating.
Margret Mwanakatwe on IMF programme is economical with the reality of truth. She says “currently a debt sustainability exercise is on to give us current debt parameters that will provide a path for the nation going forward with IMF discussion”. To begin with, the nation has not been informed by PF government what level of agreements/disagreements IMF has provided to the nation. secondly, Zambians are not incapable of finding out what has happened with IMF discussions. Felix Mutati breathed so much hot hair that came to nothing.
Mwanakatwe’s mention of the current debt stock of $8.7 billion is highly questionable given conflicting numbers provided by IMF. As at now all discussions with IMF are on hold pending Zambia to clean its house.