Cabinet has approved the engagement of Lazard Frères of France as financial advisors and Messrs White and Case of the United States of America as legal advisors Zambia in order to help with the management of the accumulated external debt that stands at over $11 billion dollars.
According to the statement released to the media by the President’s Special Assistant for Press and public relations, Isaac Chipampe, the Government needs the services of experts to engage creditors to implement measures to restore debt sustainability.
The Statement further said that the engagement of creditors that are owed money by Government is an essential strategy to address the country’s prevailing debt sustainability and fiscal challenges, especially in view of the negative impacts of the COVID-19 pandemic which has further constrained the Treasury’s resources envelope.
At the same meeting, which made a number of decisions, Cabinet also approved in principle the establishment of a K8 billion economic stimulus package that will be financed through the issuance of the COVID-19 Bond and its allocation will go towards the needy areas including payment to retirees, contractors and suppliers.
Below is the full statement
PRESS STATEMENT BY SPECIAL ASSISTANT TO THE PRESIDENT (PRESS AND PUBLIC RELATIONS) MR ISAAC CHIPAMPE ON THE DECISIONS MADE BY CABINET AT THE 16TH CABINET MEETING HELD AT MULUNGUSHI INTERNATIONAL CONFERENCE CENTRE ON MONDAY, 22ND JUNE, 2020
His Excellency the President Dr. Edgar Chagwa Lungu called for the 16th Cabinet Meeting with the view for the highest policy making body, the Cabinet, to continue to provide policy guidance with regard to the running of the affairs of Government and the need to serve the people of Zambia and ultimately, improve their standard of living.
The following were the decisions made:
1. Provision of Economic Stimulus through Issuance of COVID-19 Bond.
Cabinet approved in principle the establishment of a K8 billion economic stimulus package that will be financed through the issuance of the COVID-19 Bond and its allocation will go towards the needy areas including payment to retirees, contractors and suppliers.
Cabinet resolved that it is necessary to provide an economic stimulus through the issuance of the COVID-19 Bond in order to improve the liquidity levels in the economy that have reduced due to the Coronavirus pandemic.
2. Agreement between the Government of the Republic of Zambia and the Government of the Republic of Mauritius for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income.
Cabinet also approved the termination of the Avoidance of Double Taxation Agreement between the Government of the Republic of Zambia and the Government of the Republic of Mauritius and initiate negotiations of a new Agreement which will introduce shared taxing rights and anti-abuse clauses.
Cabinet resolved to terminate the Agreement which came into force on 15th June, 2012 as the Agreement deals with income from a number of specific sources, such as business income, dividends, interest and royalties. It gives exclusive taxation in the country of residence of the receipt of the income. As such, Zambia does not retain taxing rights to tax dividends, interest and royalties arising in Zambia and payable to residents of Mauritius.
3. International Monetary Fund Programme Mission 22nd June to 1st July, 2020.
Cabinet also deliberated on the International Monetary Fund virtual meetings with Government from 22nd June to 1st July, 2020 to commence Programme discussions. Cabinet allowed the Minister of Finance to go ahead and hold policy discussions with the IMF because Cabinet is of the view that, in line with its governing laws, the IMF provides policy advice, technical and financial assistance to member countries and that it was necessary for Government to continue such discussions with the IMF.
Cabinet is further of the view that it remains focused to continue with its fiscal structural reforms in order to strengthen the Public Financial Management Framework aimed at restoring budget credibility, improving the efficiency of public expenditures and supporting private sector led growth even under the COVID-19 environment which has exacerbated economic challenges the world-over.
4. Engagement of Financial and Legal Advisers in Relation to Government’s Debt Liability Management Exercise.
Cabinet also deliberated on the engagement of Lazard Frères of France as financial advisors and Messrs White and Case of the United States of America as legal advisors to the Republic of Zambia in relation to the liability management of its debt portfolio.
Cabinet, has as one of its priorities, implementation of measures to restore debt sustainability in order to effectively implement the measures and that in order to do this, Government needed the services of experts to engage creditors.
The engagement of creditors that are owed money by Government is an essential strategy to address the country’s prevailing debt sustainability and fiscal challenges, especially in view of the negative impacts of the COVID-19 pandemic which has further constrained the Treasury’s resources envelope.
Cabinet is of the view that, to ensure successful negotiations with creditors, it is necessary that Government engages the services of reputable financial and legal advisory firms with experience in providing advisory services in relation to the liability management of debt portfolios including options for debt cancellation, refinancing, re-scoping and postponement of some of the projects.
Lazard has also provided advisory services to some countries in Europe, Latin America and a number of African countries and private sector entities.
5. Agriculture: Food Security Situation for the 2020/2021 Agricultural Marketing Season.
Cabinet also discussed the issue of food security situation of the Nation and the actions required to ensure that the food security situation is guaranteed.
It was noted during the Meeting that a total of 3,387,469 metric tonnes of maize grain is expected to be produced and is projected to be harvested in the country and with carryover stocks of 179,247 metric tonnes, the total available stocks of maize will amount to 3,566,716 metric tonnes.
The Food Reserve Agency (FRA) is expected to buy 1,000,000 metric tonnes of white maize for the National Strategic Food Reserves as directed by His Excellency the President.
OFFICE OF THE PRESIDENT
CABINET OFFICE
LUSAKA
22ND JUNE, 2020
Dull cabinet approved to wast money in the already broken economy.sole William
We do not need Lazard, all we need is a competent and visionary leader and not Edgar Chakolwa Lungu who has no scopo donono.
Another scandle, it will cost PF a billion dollars, for empty results.
If they gave a task to B-Flow, Pilato, Miko, Wezi and team, to go meet in BUSH, the can definitely find solutions for the $11billion debt. Those wise and respectful speeches we continue listening in replays are double the minds of those PF ministers.
Taata Leza please please help our country, we cry. Such kind of decisions are unbelievable to say the least
How did we get here
Rather than be disciplined with the little finances you have all by yourself you go ask an outsider to come help you deal with your own debt at a cost. Second colonialisation of Zambia is where we think the whites can redeem us from the insatiable appetite for debt.
So what payment plan did you have when you were borrowing? You needed to consult experts before you borrowed.
I hope the government to emerge after 2021 elections has a plan of how to repay these debts and also ensure economic growth takes place. I foresee more pain for the already suffering people of Zambia. I foresee pensions going unpaid, I foresee those who win cases against the state going unpaid for long periods. My fear is that t’s not going to be easy to govern Zambia after the 2021 elections. I hope I’m wrong in this.
CHANGE OF GOVT IS AROUND THE CORNER.I PRAY TO GOD THAT WHOEVER WILL WANT TO RIG LET GOD MAKE THAT PERSON VERY SICK EVEN ICU CASE AND GET BETTER AFTER THE RESULTS HAVE BEEN ANNOUNCED.PF,WILL HAVE TO PAY THIS COMPANY EVEN IF THEY WILL BE TO LEAVE GOVT. FROM THERE OWN POCKETS CZ THEY HAVE STOLEN ALOT. CAN,THE GOVT FAIL TO ADVISE ON BEDT AND WE HAVE PEOPLE WHO HAVE ALOTY OF BRAINS NOT THESE DANDAKANIOURS LIKE KZ,,SUNDAY ETC
Whether its Euro Bond or Covid-19 bond , the fact is the PF government is worsening the countries debt situation.
What Zambia needs is debt restructuring . Replace the expensive Eurobond and Chinese loans with cheaper debt.
IMF lends at very low rates; 3%-3.5% unlike the Eurobond or Chinese loans at 9.5%+.This will improve the liquidity levels in the country.
Free up money to pay retirees, farmers , agro-dealers ,help the youth/students etc
But IMF money comes with conditions and the biggest one is “ZERO CORRUPTION”.
The PF and ECL have totally failed to meet this condition.
They are the best at what they do. So simple sensible choice. We are not going to risk procuring the services of your relative hh who has no track record in debt management just to please a minority of sadists. If we need someone to show us how to sell state companies for peanuts, then we will contact hh
Cabinet approves anything that comes their way
African democracy is in crisis – VJ
DEMOCRACY in Africa is in crisis, says Vernon Mwaanga.
The veteran politician said the new generation of African leaders had developed atrocious habits of treating national resources as personal and thereby lowering the bar of integrity.
Mwaanga said many of them use their offices to amass wealth for themselves, their families and friends.
“They use national wealth not for development or the banishment of poverty, but to satisfy their greed, power and prestige, then they cross the red line. It is immoral for wealth no matter how little, to tolerate poverty. The pattern we have been seeing in many African countries is ruthless competition between close subordinates of presidents, not to acquire money to feed, clothe or house themselves, but to give…
Ba imbwa imwe how dull are you kanshi?what is needed is to reflect back on how we recklessly spent the kongole with
a person by then being advised by an ***** like Kaiza Zulu who only know how to through punches and you expect positive motive of borrowing sure awe Zambia needs a visionary leader like Bally
If you take a close look at the Edgar Lungu led cabinet is there any sensible minister there?
All of them is yes sir, there is no one to question some of the initiatives undertaken by government officials.
PF must go!
This is something else
Lungu was told time and time again to stop unnecessary borrowing.
He just does not listen.
Most of the money they borrowed can not be accounted for.
It has vanished in thin air. But our ministers have become extremely rich.
People of Zambia, wake up.
Vote these thieving corrupt rotten people out of office.
Enough is enough!
Because the current administration has failed we have no choice but to allow foreign institutions to be proud and think they are more intelligent than us. After they are done, they will be paid money which could have been used for other important things in the country if we had a competent administration. We are only here because this government didn’t want to listen to advise, the same thing that lazard is advising them and getting paid for is exactly the same thing Zambians told the government to do when they noticed the abnormal borrowing. But they played deaf.
So in other words this approval just means this administration has accepted the fact that it has failed but it can’t go back to the Zambians who advised against bad borrowing bcz they wld say u see, we told u and so to avoid shame, they will just say all Zambians are not intelligent enough to provide advise that’s why Lazard is the only one capable of handling the damage they have caused. Because it has the reputation, the resources and the money. But if all Zambians are not intelligent why were they able to see and advise against this before it was late? Shame on PF. The most embarrassing Government of all times.
Ridiculous. Only in Zambia.
Not an objective cabinet I would say.
Intelligent people are not in this government. They are thus embarrassed to ask for advise from the local intelligent Zambians who are not in the regime. They didn’t listen about the borrowing in the first place – and are now whimpering for help from outsiders who will be laughing all the way to the bank.
The K8bn bond is a form of quantitative easing that only creates further financial instability for a country that is tied to exchange currencies like the dollar. They are essentially creating digital money. In a distorted economy such as ours, instead of reducing inflation, this has the danger of creating hyperinflation. Basically because we do not produce enough to match such a policy.
Koma kwena if ever someone will seek an example for the definition of INSANITY, it’s seriously this one!