9.5 C
Alba Iulia
Wednesday, November 25, 2020

Way Forward on Debt and Default

Columns Way Forward on Debt and Default

By Hakainde Hichilema UPND President

The PF have delivered to the Zambian people a disaster that has tarnished the reputation of our country. We are the first African country to default in the COVID-19 era, following our failure to pay a $42.5 million coupon on the expiry of grace period on November 13, 2020. This reputation will unfortunately remain with us for decades to come.

As we had earlier advised on the need to avoid a default at all cost, the country now faces a real risk of holdout creditors taking legal action to seize our sovereign assets. There are reports already that some creditors have embarked on a process to determine a possible payout to holders of default insurance, which may trigger a chain of collection of payouts that could lead to the recall of the loans in full. Some banks are considering withdrawing confirmations of letters of credit issued to our business community, while other have suspended the global custody service and advised their clients to change future investment strategies for our country.

This basically means that our business entities shall now have to pay upfront for all our imports. Our access to cheap sovereign financing is severely diminished, and potential investors will now adopt a cautious approach to investing in our country. Simply put, the confidence in our economy, that was earned through the painful sacrifice of the majority of struggling Zambians, has been wiped out in a flash. We are staring at hard and long years of austerity, unless we as Zambians collectively decide to take away the responsibility to manage our economic affairs from the hands of this PF administration – the architects of this mess!!

While it is acknowledged by all, including local and international observers, that this crisis has its roots in the PF’s poor economic mismanagement, it is the ordinary Zambian who will have to pay the price. We all must therefore lend a hand in burying the hole the PF has dug us into. We therefore suggest the following steps that the PF administration must pursue to rebuild our credibility and creditworthiness, and to earn the trust of the global village, and above all restore our pride as a people.

First and foremost, we implore the PF leaders to ensure they always read from the same script. We can no longer afford situation where the Vice President assures creditors that there will be no default, and the country defaults within a few hours of issuing that statement. It reflects a lack of sincerity in handling this serious matter. Honesty is a virtue that should not be placed into doubt in any situation.
Second, we should pay the $42.5 million we defaulted on to unlock the support we need from the bondholders, as we embark on the more critical negotiations to restructure our debt.

Third, we must immediately engage the IMF and request for a staff programme, as a basis to embark on the journey to earn our credibility, creditworthiness, and a path to fully-fledged support. This will give the needed assurance to our creditors and potential investors of our commitment to a coherent recovery programme as we focus on rebuilding our creditworthiness.

Fourth, we have to come clean and be transparent about our country’s total debt exposure. The government must provide a full picture of our public external debt, domestic debt and private debt by quasi-government institutions that are not publicly guaranteed (including those contracted by companies now owned by ZCCM IH and IDC), arrears to suppliers of goods and services to the government and VAT refund exposure. The full disclosure must cover the terms on which the debt was contracted, for example, interest rates and maturity profiles. According to our constitution, this information should already have been in the public domain for the consumption of the citizens, who ultimately are the debtors. But that is not the PF way. We the people need to know the terms and application of the loans that we will have to pay through the taxes that we diligently contribute to the treasury.

Fifth, we have to scale up the engagement with all our creditors, especially the bondholders, who feel that the level of engagement has so far fallen short. This process must be handled with seriousness, transparency and honest yon the part of the PF government to demonstrate the expected seriousness and commitment to finding acceptable solutions.

Finally, we need to revise our 2021 budget as it is the tool through which the country manages its public finances. Our budget has significant gaps (refer to the statement by the UPND on the budget), and our creditors have expressed similar misgivings. The theme should be to cut all wasteful expenditures, such as slush funds, bogus expenditures on harmful and sub-standard goods and services, huge emoluments spent on politicians’ lifestyle, including the presidential jet. There will also be a need to reprioritize expenditures, by allocating freed-up resources towards growth enhancing expenditure lines.

We encourage the PF to learn from the experience of Argentina and Ecuador, which only a couple of months ago successfully restructured their debt, with the active engagement of the bondholders. We do note, however, that sound leadership is an important requirement under these circumstances and call on the PF to own up and do what is right to address the crisis facing our beloved Zambia. There is no time to waste.

26 COMMENTS

  1. HH these are solutions that are understood by the learned. Can you please drill them down to the masses in local language. This some of us attitude is what brings you down even with brilliant ideas. What is needed is to see people in the village explaining the same thing you are saying. Don’t assume Zambians have same level of understanding. It is important that you come out through your structures. Use your money and form strong structures to educate the masses who i feel are the most vulnerable to manipulation. This is not America where you have electoral votes. It is Zambia and you will still cry in 2021 if you don’t change your formula. Go flat out explaining what the problem is and the solution without malice on your opponents.

    9
    10
  2. Free financial advice and solutions from HH.
    Not that nonsense from Bwalya Ngandu that the terms of China’s debt to Zambia are confidential.That is public debt being repaid by the tax papers money.
    What is ECL and the PF hiding from the Zambians?
    Maybe they have sold the country to China,

    20
    2
  3. Also We can’t be defaulting because we want to. Inkongole ni nkongole. We need a new minister of finance and a new central bank governor.

    7
    2
  4. Well done Mr President. Your honest contribution shows that you are above partisan politics when it comes to dealing with national matters. You are simply the best we need to take charge of Zambia.

    I doubt if PF will listen. PF should start raising 42.5milliin from its top PF brass Kaiser Dr Chilufya Tasila former minister of works and supply Road agency workers and many Top PF benefactors of the bond money.

    The solution offered by President HH is simply the best. The man even hinted how he helped Equador and Argentina restructure their debt. Amazing !

    Thank you Mr President.

    Vote UPND and HH for president next year.

    11
    3
  5. Ba pf (Kaizer Zulu explain), do you have a policy on broadcasting in this country, like the dos & don’ts of radio DJ. Like what is radio language or topics. Or do you only react to radios when they are opposing you.
    Radios in Zambia, a so called christian nation, are a shock. DJs only promote beer drinking & sex, both in comments & songs played. Komboni is worse. Even lady DJs are scary. In this country, is every song done by musicians radio worthy? Songs played are about getting drunk, beer drinking, bokosi, gumu gumu, uku momonya, mpwimpwi etc. All day. Radios have no educational or enlightening content. There are no programs on youth upliftment, what businesses youths can get into. Nothing of farming as ventures for youths. What country is pf running really?

    1
    3
  6. I agree with @Timbwi. At this moment poverty and confusion is endemic in our population and so it is important to really explain to all audiences and sections of our society what this means exactly. There are those in the majority who do not even understand what tax means,let alone what guarantees they have from their constitution. It is a bogged down scenario this and unsurprisingly the ruling party will capitalize by twisting the narrative to their advantage where the opposition is still acting intellectual and ‘snobbish’.

  7. How do you advise that you must pay $42million, if the money is not there? We all know pf has looted every dollar including reserves. PF are thieves, they have spent this whole time looting. Now the effects are showing everywhere in the economy

    4
    1
  8. So in this country there individuals who will endure the sun and standing on lines for hours to just get a voters card and come mungulu mungulu in 2021?
    So in this country there are individuals who are buy pamela mealie meal and pamela cooking oil, but will just come and vote mungulu mungulu in 2021, maybe they have special shops where they buy mealie meal, maybe they have gas filling stations specifically for them, or maybe their kwacha /dollar rate is still 5 to a dollar.

    2
    1
  9. What tarnished reputation? Will people eat a good reputation? The reason the poverty cycle continues to affect majority of Zambian is bore from the long term effects of the crooked selfish privatisation you were part of. Why don’t you analyse that and give solutions to that? Most of those who benefited millions like you are still roaming Zambia freely. If we took you all to courts and got what is rightfully for zambians back from you then we would be in a better position. So my friend just wait for inquiry. Since you don’t want to pay back voluntarily we will ensure you are forced to, mr billionaire.

    6
    17
  10. KZ

    “…The reason the poverty cycle continues to affect majority of Zambian is bore from the long term effects of the crooked selfish privatisation you were part of. Why don’t you analyse that and give solutions to that? …”

    Hehehehehehe……..hohohoh….

    You tell me after blowing $20 billion , 10 years in office , you and your corrupt theif lungu still have not got any solutions…?????

    Ati ……tarnished reputation ???
    HH is not a fraud convict like lungu…nor is he an abysmal failour like lungu.

    2
    2
  11. KZ

    “…The reason the poverty cycle continues to affect majority of Zambian is bore from the long term effects of the crooked selfish privatisation you were part of. Why don’t you analyse that and give solutions to that? …”

    Hehehehehehe……..hohohoh….

    You tell me after blowing $20 billion , 10 years in office , you and your corrupt theif lungu still have not got any solutions…?????

    Ati ……tarnished reputation ???
    HH is not a fraud convict like lungu…nor is he an abysmal failour like lungu who can only win elections by violence and bribing…..

  12. KZ

    “…The reason the poverty cycle continues to affect majority of Zambian is bore from the long term effects of the crooked selfish privatisation you were part of. Why don’t you analyse that and give solutions to that? …”

    Hehehehehehe……..hohohoh….

    You tell me after blowing $20 billion , 10 years in office , you and your corrupt theif lungu still have not got any solutions…?????

    Will the unemployed Zambians eat roads ?

  13. Thank God there is someone who understands finance and economics running for President next year. KZ, you and your mates are failing to pay basic UNZA fees, but can hand out brand new buses to localities if they promise to bring in PF votes? It’s an absolute disgrace. Everytime you try and defend them, you are spitting on the common people of Zambia and expecting them to thank you for rain.

  14. 20TH November,2020
    TO WHOM IT MAY CONCERN
    TITLE: ZAMBIAN KWACHA DEPRECIATION AGAINST DOLLAR CAN BE REVERSED
    Sir/Madam, it is worrying the way our Zambian Kwacha has been depreciating to USD and other currencies. The depreciation can be stopped simply by common sense. It has come to my understanding that despite an increase in copper production in Zambia, Our Currency has continued to depreciate. Where have we gone wrong? Where are we missing it? Is there a demons on computers playing with figures depreciating our Kwacha willingly? Is it the credit rate causing this? Is the debts we have contracted that has caused our Kwacha loose value instead of gaining?
    As long as we continue attracting foreign investors making money in Zambia and export to their foreign countries, the depreciation…

  15. This is how you get elected. This is what Zambians need to hear. The question you should think about is how do we grow our GDP to about 100 Billion so our debt ratio can shrink? How can we create jobs for our people. You will need to employ economic advisors from developed countries; they went through what we are experiencing.

  16. The saint you are wrong about 1800 but definitely right about the monkey hh eating maize meant for all Zambians during privatisation. I like your analogy albeit slightly inaccurate

  17. Who ever is trying to lowa me, you won’t manage. How can I get a headache now even before I have started drinking. Oh God protect me from these evil upnd diasporans. Send back all the evil wishes to them. Burn them with your holy fire oh lord. Oh jehovah amen.

    2
    2
  18. This hopeless tribal baboon he wants to advise on things he hardly understands. Hes failing to run his farm how can he run a country! And being from a minority tribal called Tonga, he thinks he can rule and marginalize the huge Bemba tribe! That will be recipe for huge problems in the country! HH lacks capacity to manage people. He lacks humour! He lacks anything good and progressive, that’s his support is tribal based.

  19. WHAT A SHALLOW ANALYSIS. HOW DO YOU PAY WHAT YOU DON’T HAVE UNLESS WE GET SOME OF THE HH MONEY STASHED AWAY IN THE PARADISE ISLANDS
    WE SHALL ENGAGE FOR BETTER TERMS A, AND EVENTUALLY PAY.
    MEANWHILE ZAMBIA NEEDS TO HOLD AN INDABA TO CHART A NEW ECONOMIC MODEL BECAUSE THE CURRENT ONE HAS FAILED TO GROW THE ECONOMY AND HENCE THE GDP AND HENCE THE BORROWING FOR THE INFRASTRUCTURE DEVELOPMENT.
    IN CASE YOU HAVE NOT NOTICED ZAMBIA IS STILL GREATLY UNDER DEVELOPED. hh WITH HIS BLINKERED MIND DOES NOT SEE THAT EXCEPT WHAT HIS MASTERS TELL HIM.
    BESIDES I WOULD NOT VOTE FOR A PARTY WHOSE PRESIDENT MUST BE FROM ONE TRIBE BECAUSE IT ALSO MEANS THE ZAMBIAN PRESIDENT MUST BE FROM ONE TRIBE. THIS IS ANATHEMA TO OUR BELIEFS AND MUST BE REJECTED OURIGHT. IT IS ALSO CONTEMPTIBLE.

    1
    2
  20. WHAT A SHALLOW ANALYSIS. HOW DO YOU PAY WHAT YOU DON’T HAVE UNLESS WE GET SOME OF THE HH MONEY STASHED AWAY IN THE PARADISE ISLANDS
    WE SHALL ENGAGE FOR BETTER TERMS A, AND EVENTUALLY PAY.
    MEANWHILE ZAMBIA NEEDS TO HOLD AN INDABA TO CHART A NEW ECONOMIC MODEL BECAUSE THE CURRENT ONE HAS FAILED TO GROW THE ECONOMY AND HENCE THE GDP AND HENCE THE BORROWING FOR THE INFRASTRUCTURE DEVELOPMENT.
    IN CASE YOU HAVE NOT NOTICED ZAMBIA IS STILL GREATLY UNDER DEVELOPED. hh WITH HIS BLINKERED MIND DOES NOT SEE THAT EXCEPT WHAT HIS MASTERS TELL HIM.
    BESIDES I WOULD NOT VOTE FOR A PARTY WHOSE PRESIDENT MUST BE FROM ONE TRIBE BECAUSE IT ALSO MEANS THE ZAMBIAN PRESIDENT MUST BE FROM ONE TRIBE. THIS IS ANATHEMA TO OUR BELIEFS AND MUST BE REJECTED OURIGHT. IT IS ALSO CONTEMPTIBLE.!

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisement -
Loading...
- Advertisement -

Latest News

Malupenga urges media to also report on Science and not just politics

Ministry of Information and Broadcasting Services Permanent Secretary, Amos Malupenga has called on the media fraternity to prioritize their...

Zambia advised to increase Funding to the Wildlife and Tourism Sector

World Wide Fund for Nature (WWF) in Zambia has advised government to consider increasing funding in the wildlife and tourism sector as it has...

Civil Servants urge to embrace National School of Government

North Western Province Permanent Secretary Willies Mangimela says government wants to change the negative perception of the civil service by the public through the...

The Potential Implications of a Debt Default For Zambia’s Economy

By Wakumelo Mataa Following a rapid increase in its debt stock over the past decade, Zambia has continued to run the economy under a...

Richard Musukwa Warns HH Against using disparaging remarks on President Edgar Lungu

Patriotic Front (PF) National Mobilisation Chairperson Richard Musukwa has cautioned UPND leader Hakainde Hichilema against using disparaging remarks on President Edgar Lungu. Mr. Musukwa said...

More Articles In This Category