The Zambian Government has categorically denied reports that it is engaged in talks with Chinese owned enterprises to takeover state assets such as ZESCO.
In a statement, Finance Minister Margaret Mwanakatwe stated that the Zambian government has not offered any state owned enterprises to any lender as collateral for any borrowing.
Mrs Mwanakatwe further stated that there is no debt default by the Zambian government on its debt obligations to the Chinese government and other Chinese lenders.
She also pointed out that in the first half of 2018, a total of US$341.82 million was paid to various creditors as interest payments as opposed to US$489 million which was falsely reported in the Africa Confidential publication.
Below is the full statement from the Ministry of Finance.
For immediate release
SHAREHOLDER STATEMENT ON STATE ASSETS AND LIABILITIES
The Zambian Government HAS NOT offered any State Owned Enterprise to any lender as collateral for any borrowing.
We have noted with concern, a trend by some media outlets and individuals who have chosen to deliberately publish misleading information on Zambia’s economic and debt situation. In particular, I refer to an article published on 3rd September 2018 by the Africa Confidential entitled “Bonds, Bills and ever bigger debt.”
For purposes of this statement, the Laws of Zambia, CAP 349 Minister of Finance [Incorporation], states that the Minister of Finance shall be a corporation sole by that name, with perpetual succession and an official seal, and with power to acquire and hold in that name lands, government securities, shares in any company, securities for money, and real and personal property of every description, to sue and be sued, to execute deeds, to enter into agreements binding on themselves and their successors in office, and to do all other acts necessary of expedient to be done in respect of the above maters or any of them.
In view of the foregoing, I now wish to address a few issues raised in the Africa Confidential Report as follows:
Zambia’s debt and state owned enterprises
As the shareholding Minister in the state owned enterprises that the Africa Confidential Report linked to a debt takeover, and in my capacity as Minister in charge of loan contraction and debt servicing as stipulated in the Loans and Guarantees Authorization Act and the Public Finance Act, I wish to state as follows:
1. There has been NO DEBT DEFAULT BY THE REPUBLIC OF ZAMBIA on our debt obligations to the Chinese Government and other Chinese lenders;
2. The loan at the Kenneth Kaunda International Airport [KKIA] is still being disbursed by the lenders. In this regard, we have NOT yet started repaying the loan because the new airport terminal IS STILL UNDER CONSTRUCTION;
3. The Zesco loans from Chinese lenders relate to the extension project for the Kariba North Bank Power Station and the recently commenced Kafue Gorge Lower Power Station Construction Project, which two stations are INDEPENDENT OF ZESCO as ZESCO only holds shareholding interest in the two power stations through a separate special purpose vehicle. Loan repayments on the Kariba North Bank Extension Project are duly on course while the loan repayments for the Kafue Gorge Lower Power Station have not commenced as the Power Station is still under construction;
4. With regard to the Digital Migration programme, the government obtained a loan from China to ensure that the programme was implemented in the country. This loan is being serviced by the Government and is on course without arrears. Zambia National Broadcasting Corporation was NEVER offered as collateral for the loan. Instead, ZNBC and Start Times of China created an independent special purpose vehicle called Top Star to implement the digital migration programme; and,
5. For all other loans that have been contracted from the Chinese government, the security on the loans is in form of insurance taken from Sinosure and for state owned enterprises an insurance from Sinosure and guarantee from the government are in place. Therefore, NO COLLATERAL IN THE FORM AS ASSETS has been provided for borrowings and none of the guarantees has been called upon.
To insinuate takeover of any asset by the Chinese Government, therefore, IS NOT PRACTICAL AND FEASIBLE. Further, I wish to state that THERE HAS NEVER at any time been discussions of a DEBT/ASSET SWAP between the Zambia and any of its creditors, China inclusive.
Debt service and composition
My Ministry wishes to clarify that in the first half of 2018, a total of US$341.82 million was paid to various creditors as interest payments as opposed to US$489 million which was falsely reported in the Africa Confidential publication. In terms of the external debt composition by type of creditor, Commercial Debt accounts for 53 percent of the debt while that owed to China is less than 30 percent.
Printing of bank notes
Allegations that the Country has been printing more banknotes to increase money supply in the circulation should be dismissed. Contrary to the assertions by Africa Confidential, bank notes are reprinted on well-defined schedules and are done either to replace old notes or to introduce more secure notes to curb counterfeits on the market. We have NO INTENTION to print more banknotes to increase money supply.
I also wish to set the record clear on the supplementary budget. The supplementary budget passed by Parliament HAS NO NEW OR ADDITIONAL MONEY. The figures reflected were mere variation of funds from lower priority or slow moving budget lines to higher priority and positively impactful budget activities.
Whilst members of the public are free to comment on our economy, it is incumbent upon authors that their articles should be ethical, professional and factual. In instances where information is lacking, my Ministry is ready to provide clarity so that publications are not speculative, thereby, causing unnecessary excitement with negative impacts on business and livelihoods in Zambia.
We remain open to provide any extra clarity that stakeholders may wish to raise in this regard.
Margaret D. Mwanakatwe, MP
Minister of Finance