Saturday, June 15, 2024

Stakeholders worry Eurobond default will cause economic crisis

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THE Kitwe Chamber of Commerce has expressed fear that the country will plunge into economic distress if government fails to pay the portion of the Eurobond debt due today.

Speaking in an interview with ZANIS in Kitwe yesterday, Chamber Vice President Emmanuel Mbambiko said defaulting on the Eurobond payment will put pressure on the already poorly performing Zambian Kwacha.

“This will reduce Zambia’s confidence in the eyes of lenders as such it will be difficulty for the country to borrow in future or attract foreign investment,” he said.

He explained that defaulting is bad for business as well as the economy and that all Zambians should be concerned.

And in a separate interview, Green Party president Peter Sinkamba has taken a swipe at government for not implementing his calls to legalize the cultivation and sale of marijuana for the country to raise the needed money to pay the sovereign debt.

Mr. Sinkamba said government would have raised the money to pay the Eurobond debt money if it had listened to his advice on Marijuana cultivation.

“You will default and the chances of being bailed out are not there,” Mr. Sinkamba charged.

He said the impact of defaulting thereafter will be very hard on the general public because all the money meant for social services will go towards payment of the debt.

And the Mine Suppliers cried that they will become uncompetitive due to their imported mine products which will become more expensive as the default puts more pressure on the Zambian Kwacha which is expected to further lose value.

Mine Suppliers and Contractors Association President Augustine Mubanga told ZANIS in Kitwe today that the default will also restrict government from paying its local suppliers as it will be under pressure to pay the sovereign debt.

He noted that the constriction in government expenditure on local suppliers and contractors will also constrict production and economic growth in turn.

He however defended government on the possible default saying this would be as a result of government not having collected the projected tax revenue because of the COVID-19 pandemic which slowed down most businesses in the country.

“In an event that Government defaults, it will not be deliberate but as a result of failure to raise enough revenue due to the impact of the COVID-19 pandemic,” Mr. Mubanga said.

Mr. Mubanga further stated that Zambia will not be the first country in the world to default on the sovereign debt as there are some bigger economies that have defaulted in the past and still managed to rebound afterwards.

He cited Switzerland, Mexico, Greece and France as some of the countries that have defaulted on the sovereign debts in the past.

Last month, government missed payment of $42.5 million coupon on one of its Eurobonds and had asked the creditors to delay interest payment until April.

The bondholders have however not agreed to the request and the country is today supposed to make the payment or record a default.

Minister of Finance told Reuters yesterday that government was doing everything possible to avoid defaulting.

24 COMMENTS

  1. They are failing to pay $42 million but awarding million dollar contracts to a pharmacy and a car wash …you see the recklessness of these people!!

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  2. Worrying about something that has and won’t be allowed to happen is a waste of energy. Why not put that energy in finding ways to storm the weather caused by the impact of coronavirus on the economy rather than just worrying like a crazy hyena. Do something for your self and your country. Think how can I help my country rather than become like the crazy hateful diasporans who wish the worst for their birth country. These traitors should never be allowed to regain zambian citizenship. They are a risk to our security

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  3. Where are they , least we forget ……

    The infallible njimbu , who told us that it rains money around lungu…..njimbu was of the conviction that lungu is a good leader on account of the expensive suits he wears….

    Then there was mr terrible , bachembele….badala
    Lungu was God sent according to him…and investores are falling over them selves to invest in Zambia….

    And of course how can we forget the predictions of one 2020vision…..the dollar  would be at kw5 , mealmeal would be trading at kw50 because of the exemplary leadership of lungu. 2020vision is mute on his predictions and is reduced to running a crusade against SUVs …..

    Who else can remember some of them who have scattered and taken cover ?

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  4. At the very beginning of his appearing on this site, I suggested and cautioned the wider readership that Kaiser Zulu mind and pattern of his thinking left many questions unanswered at best may be insane. He vigorously defended and justified himself hiding behind the Vin pin. Fast forward- Almost all his commentaries on any subject of discussion is proof enough or vindication emerged that we may be dealing with a schizophrenic person.
    Kaizer Zulu in his contributions exhibits a combination of delusions, hallucinations and disorderly thinking that impairs his daily functioning, hence his incessant commentary on every news on LT site. He believes normal when actually abnormal. He needs help.

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  5. What was that fund proposed when they were contracting this Eurobond? Sinking fund? Where did it sink to? Si apa nthawi yatifikila abale. It is never far when you have a time of reckoning. Good luck mother Zambia! Tizakasabana ndipo.

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  6. FOR THE UMPTEENTH TIME!
    CHANGE THE ECONOMIC MODEL
    GROW FOR EXPORT
    ALLOW MAIZE EXPORTS INCLUDING MARIJUANA IF NECESSARY
    TOO MANY SHOPPING MALLS EXPORTING DOLLARS
    GET THE UNEMPLOYED YOUTHS TO GROW FOR EXPORTS

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  7. Currency depreciation 52% in one year, inflation double digit, exchange rate historic high might even go to K30 to a dollar, reserves depleted, unemployment all time high, debt unsustainable and even defaulting now, governance a night mare no civil liberties for the opposition, public media is a preserve of the ruling PF. How do you run a country like this. No tribal balancing in government and busy calling their opponents tribal. This is the real worst government since 1964. I am non partisan and don’t have any confidence in all other parties but PF has performed very poorly in government

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  8. Even just our mindset, there is something terribly wrong, imagine the DRC offers very good pricing for maize and according to the Zambian government, exports by citizen to this lucrative market is smuggling, How can this be so and continue being so, very strange. Need for a focused government to come in, change this and ensure Zambian citizens get more returns for their produce. With PF, we are dead stuck

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  9. PF should not even blame Corona virus for the rotten economy , Corona virus only came yesterday, the economic decline started way back.

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  10. Kwena Ba KZ. One eats and want those who have not eaten to clean the plates. What cruelty is this? May God intervene and teach those who brought into this a big lesson. Please!

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  11. They would rather buy overpriced fire tenders for $42million than reduce the debt because that would mean all that extra cash in their personal coffers while the people continue suffering.

  12. Muna Dekhane – Please dont give the UK based phoney credibility ……amateurs like ZWD think its KZ posting such nonsense, he is a fooool but not this fooooolish only some moron with nothing to lose can post nonsense like this sillly pubescent!!

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  13. Worrying will not make the situation better. When the going gets tough, the tough must get going – not start worrying. As a country, Zambia has the very best conditions for emerging from an economic crisis:

    – still plenty of natural resources
    – still plenty of unharnessed agricultural potential
    – still plenty of untapped tourism potential
    – still plenty of young, human skilled labour plus countless investment opportunities. Enduring peace and political stability. Let us focus on these.

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  14. HH Advised To Google On The Internet To See The Eurobond Economic Benefits To Zambia

    September 18th 2012

    Lusaka Times

    Government has castigated United Party for National Development (UPND) president Hakainde Hichilema over his remarks that the successful issuance of a US$750 million Eurobond should not excite the country as it is just a loan. Finance Deputy Minister Miles Sampa says there is need for Mr. Hichilema to understand the benefits of this maiden record-breaking Eurobond because it will go a long way to assist in the development of infrastructure in the country. Mr. Sampa advised the UPND leader to instead google on the internet so that he could see the economic benefits which lie ahead from the utilization of such a bond. He said it is unfortunate that there are some…

  15. Check all economic indicators and stop showing your ignorance here, everything is in negative, so what viva. Wake up

  16. Nine Chale- you are truly gullible and very docile…the people who you sympathise with have eaten all the food including the plates and table..you want to advise them to take up poultry farming..really laughable

  17. Margaret Mwanakatwe said that she could repay the loans by selling Mukula logs. B R Mumba snr said twende webo. Where’s he now?

  18. Tarino you said you would ignore me and yet you have commented about me Haha. Only you believe am an imposter. Even the opposition media knows who I am and that I am genuine. Is it not funny that you with an alias are the one calling me, who has my face picture and real name, an imposter? I am not the one using bottles as a profile picture. Grow up. You have been trying for months to paint me as an imposter but you have failed miserably. Zwd carry out due diligence before posting anything. Fyi I was contacted by them to corroborate the comment they quoted. Now eff off. No one likes you here

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  19. Failed to pay a $42.6 million but busy dishing out youth empowerment that benefits a few.
    Covid worked to the goodness of zambia,all the donations have been shared,misapplied,mismanaged,and abused.
    Welcome to Zambia the real Africa.

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