The Green Party says Government should tread cautiously and avoid criminality on Eurobond refinancing.
Responding to a question on President Edgar Lungu’s request for a Turkey business entity to refinance the Zambia Eurobonds, Green Party leader Peter Sinkamba said there is nothing sinister for a private business entity to refinance the Eurobond provided such an arrangement is done within the prescribed laws.
Mr. Sinkamba explained that the largest portion of our foreign debt is owed to commercial creditors and accounts for nearly half of the total external debt stock of US$3.0 billion Eurobond debt.
“This money in question is not money lent by bilateral or multilateral to Government. Rather it is private money lent by commercial creditors to Government. There are agreements and rules that govern bilateral and multilateral transactions. And there are laws and regulations that govern commercial transactions between Government and private entities. So logically, there is nothing sinister for Government to enter into a lending transaction with bilateral and multilateral partners. And equally, there is nothing sinister for Governmet and a private entity to enter into any transaction including the propsoed bailout by way of refinancing the Eurobonds. The only catch is that either way, any such transaction should be executed within the framework of agreements and the prescribed law,” Mr. Sinkamba said.
“So, the starting point is for Government to tread cautiously on the proposed Eurobond refinancing strategy. Since the proposed arrangement is not a bilateral or multilateral financing arrangement but private business entity, this triggers into effect the Zambia Public Procurement Act on award contracts especially as regard to single-sourcing. It also triggers in the Anti-Corruption Act, Public Procurement Act, Public Finance Management Act, Minister of Finance (Incorporation) Act, Citizens Economic Empowerment Act, Zambia Competition and Consumer Protection Act, and other laws and regulations,” he said.
He said that since commercial debts, and particularly Eurobonds, carry significantly higher borrowing costs than concessional debt, and considering the amounts involved in the prposed Eurobond bailout, there is no doubt in his mind that legally, any private refinancing arrangements such as the proposed arrangement would require public tendering for competitiveness’s sake as required by law.
“The amounts involved are colossal. If it is a mere grant without any additional costs to the already agreed upon costs at vesting, there would have no problem at all. We would not have needed any bidding process if there is no additional costs. But where any arrangement entails additional costs, then the bid process and other requirements are triggered in,” Mr. Sinkamba explained.
He however indicated that the laws provide for limits for single-sourcing depending on the amount involved and added that any disregard of such thresholds is criminal.
“So, Government leaders should be cautious so as to avoid any elements of criminality in the proposed transaction by following requirements of the prescribed law,” he added.
Asked what he would have done differently if his party was in government, Mr. Sinkamba explained that refinancing of the Eurobond debt would not have been an option. He said his government would have opted for dismantling of the debt by liquidating it through extra revenue from marijuana industrialization.
“You see, we have been vindicated on our marijuana industrialization agenda. The whole world has come to agree with us that marijuana is big business and they have since provided frameworks for implementation of our agnda. Our programme is targetted to generate in excess of US$36 billion per annum from the marijuana industrialization. With this sort of extra money in our hands, we could have simply paid off the entire domestic and external debt currently estimated at US$13.5 Billion. We could have been a debt-free nation by the end of 2019,” Mr. Sinkamba said.
ISSUED BY THE GREEN PARTY MEDIA TEAM
31 JULY, 2018