Finance Minister Margaret Mwanakatwe has strongly denied assertions that the Zambian government is hiding the true extent of the country’s debt stock.
In a statement, Mrs Mwanakatwe maintained that Zambia’s external debt was US$8.7 billion while domestic debt stood at K48.4 billion and domestic arrears were at K12.7 billion as at December 2017.
Mrs Mwanakatwe said members of the public or any creditor who feels that debt stock has been under reported are encouraged to submit verified and audited information to the Ministry of Finance.
On Chinese loans, Mrs Mwanakatwe stressed that the issue of Chinese debt has been grossly misrepresented by some members of the public.
She said Zambia has contracted both concessional and commercial debt from China and that the country has never defaulted on any of the Chinese debts.
“Restructuring is an option that is open to us and will be undertaken as and when the need arises. We cannot foretell market conditions in the period 2021 to 2027, however, we are keen to put in place a more robust and smoothened cash flow in our debt sustainability strategy,” Mrs Mwanakatwe said.
Below is the full statement from Mrs Mwanakatwe
ZAMBIA’S DEBT STOCK
PERCEPTION OF HIDDEN LOANS
We would like to reaffirm that following the recent exercise in reconciling and updating our debt information, Zambia’s debt stock as at end December, 2017, is as follows:
1) External Debt was US$8.7 billion;
2) Domestic Debt was K48.4 billion; and;
3) Domestic arrears stood at K12.7 billion.
As Government, these are the loans that we have contracted. To this extent, we wish to state that every contracted loan is published in the Government’s Mid-Year and Annual Economic Reports that are laid before the National Assembly as required by law. The Economic Reports are widely distributed both to our electronic and print media audiences.
The 2017 Annual Economic Report has been published and can be accessed on the Ministry of Finance website [www.mof.gov.zm] and data portal. The report contains creditor by creditor numbers.
Members of the public or any creditor who feels that debt stock has been under reported are encouraged to submit verified and audited information to the Ministry of Finance.
All of Zambia’s debt payments are provided for in the audited Financial Report and cross checked against debts in the data base. The information is also laid before the National Assembly as required by law.
We have no incentive as Government to engage in debt misreporting to the National Assembly and the public as such an act has adverse legal implications.
We appeal to stakeholders to resist the temptation of transforming feelings and perceptions into unverified, unaudited, and speculative information which has the devastating effect of eroding confidence in the economy.
SPECULATION ON AN INDEPENDENT AUDIT
There have been insinuations in some quarters that the IMF requested the Zambian Government to carry out an independent audit of its debt. WE ARE NOT AWARE OF SUCH A REQUEST. Suffice to say, WE HAVE NEVER BEEN REQUESTED BY ANY ENTITY, INCLUDING THE IMF, TO CONDUCT SUCH AN EXERCISE.
We have been conducting Debt Sustainability Analysis [DSA] exercises annually and this is done with credible international partners, including the IMF, World Bank, and the Macroeconomic and Financial Management Institute [MEFMI] of Eastern and Southern Africa. The last DSA was conducted with the full participation of IMF and published in August 2017. Government is currently finalizing the 2018 DSA.
We appeal to members of the public that may not be clear with economic data and information to ALWAYS CONTACT THE MINISTRY OF FINANCE and obtain clarity to ensure balanced, factual, and credible reporting. On our part we will continue with stakeholder engagements on a regular basis to provide factual information and avoid speculation.
Our engagement with the IMF has been based on the home grown Economic Stabilisation and Growth Programme. Key among others is the development and implementation of the Medium-Term Debt Strategy. The strategy defines a sustainable debt management path.
Going forward, we will continue to engage the IMF on various reforms including debt management.
We will engage the IMF on similar lines as we have done on policy and structural reforms with a view to agreeing on a path that reduces Zambia debt levels from a high risk of debt distress to a moderate and then low risk of debt distress over the medium to long term.
The Debt Sustainability Analysis that the Government is currently conducting is an important part of this engagement. This is an annual exercise whose results will inform us of alterations to the strategy, if any. The results will be shared with our cooperating partners.
We also wish to state that we will continue to strengthen the process of debt contraction in the context of broader public financial management reforms. These reforms are being supported by various cooperating partners.
We will also continue to implement the home grown Economic Stabilisation and Growth Programme. This is an official Government assurance.
A competent team of officials from the Ministry of Finance and Bank of Zambia are working on modalities of handling Eurobond obligations when they fall due. ZAMBIA HAS NOT DEFAULTED ON ANY OF THE EUROBOND INTEREST PAYMENTS.
Work has commenced early to allow for time to set our actions in motion.
No bond holder will be coerced into selling off their position. Zambia will follow market-based processes in handling the bonds. This is an official Government assurance.
The issue of debt from China has been grossly misrepresented by some members of the public.
Zambia has contracted both concessional and commercial debt from China. WE HAVE NOT DEFAULTED ON ANY OF THE DEBTS FROM CHINA. Restructuring is an option that is open to us and will be undertaken as and when the need arises.
We cannot foretell market conditions in the period 2021 to 2027, however, we are keen to put in place a more robust and smoothened cash flow in our debt sustainability strategy.
Zambia stands ready to cooperate with partners who are ready and willing to work with us for the development of a better Zambia.
Margaret D. Mwanakatwe, MP
MINISTER OF FINANCE