K950 million paid to institutions to clear outstanding bills to suppliers of goods and services during the COVID-19 pandemic

Finance Minister Dr. Bwalya Ng’andu has disclosed that K950 million has been paid to institutions to clear outstanding bills to suppliers of goods and services during the COVID-19 pandemic.

Dr. Ng’andu said K500 million was released to the Public Service Pensions Fund to pay over 1,500 retirees or their beneficiaries.

He said this when he delivered a ministerial statement to Parliament on Tuesday afternoon.

”To alleviate the economic pressures associated with the Covid-19 induced liquidity challenges His Excellency the President in his address to the nation announced the availing of K2.5 billion in financial relief for businesses. In this regard, Government released: K500 million to the Public Service Pensions Fund to pay over 1,500 retirees or their beneficiaries; K170 million to Banks to clear third party arrears; K140 million to various road contractors; K950 million has been paid to institutions to clear outstanding bills to suppliers of goods and services,” he told Parliament.

“Mr. Speaker, I wish to report that the Ministry has progressed with the modalities of setting up of an SME Fund that was directed by his Excellency the President. The funds to be used will be allocated from the Covid-19 Mitigation Bond. The Bond is targeting to raise up to K8 billion in tranches from the Banking sector and Pension Funds. Mr. Speaker, I wish to report that so far, Government has managed to raise K6.8 billion. The bond proceeds will solely target to finance domestic expenditures as it is supposed to be applied to boost the economy. No foreign related expenditures will be covered as this will defeat the objective of improving liquidity in the market and negatively impacting the exchange rate of the Kwacha against major tradable currencies.”

Dr. Ng’andu stated that the financial sector’s liquidity challenges have further been eased through the Bank of Zambia’s K10 Billion Medium-Term Refinancing Facility.

He said this Facility is available eligible commercial banks and non-bank financial institutions to access in order to restructure, refinance or extend credit to businesses and households impacted by Covid-19 on more favourable terms.

“I wish to report that the uptake of the facility commenced with applications from the Banking Sector and Non-Bank Financial Sector being processed and approved by the Bank of Zambia. As at 13th July 2020, we have had eleven (11) banks and twelve (12) non-bank financial institutions submitting applications for financing worth a total of K4,821,2 million, out of which K3,875.6 million has been approved. This represents 80 percent approval of total financing requested and of which twenty three percent (23%) has already been disbursed to 9,762 beneficiaries,” he added.

“Sir, I should emphasize that these funds are meant for relief on the part of business and are offered at relatively lower interest rates. It is expected that financial service providers will pass this benefit to their customers. Mr. Speaker, the recovery from the impact of Covid-19 will require a concerted effort over the medium-term. To deal with the ‘New Normal’ of Covid-19 and help businesses recover, Government is intensively reviewing policies to come up with additional measures that will support businesses over the medium-term.”

He emphasized that the unprecedented outbreak of the Covid-19 pandemic has reversed the fortunes of many economies around the world.

He further added that as a result, experts have lowered economic growth prospects of the global economy in 2020.

“For instance, the International Monetary Fund (IMF) has projected that the world will record the worst economic fallout since the Great Depression of the 1930s. This fallout is also expected to be much worse than the 2007/2008 financial crisis,” he said.