Wynter Kabimba has said that PF under President Edgar Lungu is desperate to show that it had made progress on the infrastructure projects initiated by late President Michael Sata. In a statement released to the media, Mr Kabimba said the PF was looking for fresh money to cover up for its misuse and squander of the public resources that were previously mobilized.

He said over borrowing was an act of desperation that would ultimately bring Zambia to the verge of bankruptcy.

Commenting on the issuance of U$S1.25 billion Eurobond, Mr Kabimba said it would push the economy to a total external debt of U$S6.05 billion.

Mr Kabimba said U$S6.05 billion external debt would not be manageable given the weakness of the kwacha.

He said U$S750 million which was acquired in 2012 yielded 5.625 percent and the second issuance of U$S 1 billion was, in retrospect, a gamble.

Below is the full statement

POSITION OF THE RAINBOW PARTY ON THE ISSUANCE OF US$1.25 BILLION EUROBOND BY THE PATRIOTIC FRONT GOVERNMENT

On the 23rd July, 2015, the Patriotic Front (PF) led government recklessly issued a total of US$1.25 billion Eurobond, in another step to bankrupt the Zambian economy. This is the third international bond issuance within the four years that the PF has been in power and carries with it a hefty 9.375% interest! This is a much higher cost of borrowing compared to the previous 2 issuances as well as those from sovereigns as diverse as Kenya, Ethiopia, Rwanda, Ghana, Nigeria, Ivory Coast and Senegal.

In 2012, it made sense to issue the first US750 million 10-year note at a yield of just 5.625%. At that time the international commodity prices were high, interest rates were at their lowest, the country’s external reserves were relatively high, the GDP growth projections were favorable at around 7% and the country’s international rating was still acceptable. The Zambian people and the international lending institutions wholeheartedly supported that issuance because it was logical and made economic sense.

The second issuance in 2014 was, in retrospect, a gamble. This was a 10-year Eurobond of US$1 billion at 8.5% due for repayment in 2024. Last year, the country’s international rating had been downgraded, the budget deficit was increasing, external reserves were being depleted, no clear debt management plan was in a place and the overall fiscal discipline was deplorable. The higher interest rate by global standards of 8.5% was a clear signal that fund managers were no longer confident in the PF government’s ability to effectively manage the Zambian economy. It was in essence a cost and punishment meted on the tax payer of this country due to the gross incompetence of the PF government. The IMF and World Bank advised the PF government to be cautious in contracting expensive, commercial debt and pointed to the urgent need for a clear debt management strategy. This advice has fallen on deaf ears.

Despite the high cost to be incurred through the second Eurobond issuance, the PF government still went ahead to issue a third Eurobond. This amounts to a crime against the Zambian people. It is a sheer recklessness. The contextual facts that spoke against any further bond issuance are as follows:

1. The copper commodity prices are still low and with no prospects of a quick rebound. The export revenue base has therefore narrowed and debt repayment will therefore be a challenge.
2. The kwacha has drastically depreciated and is at its lowest level in decades. This has pushed the currency risks to unprecedented levels;
3. Fiscal discipline is at its lowest in Zambian history – with rampant high levels of non prioritised spending and corruption;
4. Next year’s pending elections is adding to the budgetary pressures and reducing the proportions of the Eurobond that will go into infrastructure spending.
5. The PF government does not have the capacity and discipline to quickly and efficiently utilize the funding and let alone adhere to the programmed use of the resources;
6. The requisite debt strategy and plan is not yet in place;
7. The whole world knows that the USA will soon raise its interest rate and this is inflating frontier yields – again, it is the wrong time to contract commercial debt.

This issuance is therefore neither in line with prudent debt management practices nor will it ensure a sustainable debt redemption profile. Why then would a government be that reckless and go ahead to make a decision that defies both economic and political logic?
First, the PF government under President Lungu is desperate to show that it has made progress on the infrastructure projects initiated by the late President Michael Sata. It is thus looking for fresh money to cover up for its misuse and squander of the public resources that were previously mobilized. It is an act of desperation that will ultimately bring this country on the verge of bankruptcy.

Secondly, the PF government views the Eurobond window as a potential cash cow to fund its 2016 election campaign as well as enrich the individual pockets of its leadership.

The Rainbow Party strongly condemns this short term and reckless behavior of the PF government. Just a decade after a Zambia campaigned and got international debt forgiveness, this government is pushing our country back into a dangerous habit of borrowing beyond the economy’s means. The third issuance pushes the economy to total external debt to $6.05 billion, or nearly a quarter of GDP, which is not manageable given the weakness of the kwacha and the above outlined negative developments. To the Zambian voters, the PF government MUST be stopped before it inflicts more damage and destroys the livelihoods of future generations. The way to do that is to rally around and vote for the Rainbow Party in 2016. There is still some room to redeem this economy from the incompetency of the PF government.

From the General Secretary of the Central Committee, Comrade Wynter M. Kabimba

The pronouncement by President Edgar Lungu that his Government shall create 500,000 jobs by 2016 is simply nkhani zamu Jameson or indeed nkhani zamu Kachasu because it is totally unattainable looking at the prevailing realities with regards to the economy.

The so called Youth Policy and Action Plan does not even address HOW it will create the 500,000 jobs.

The President has been forced by his spin doctors to say something positive, looking at the fact that every news on the economy has been negative. It is not possible to create 500,000 jobs by 2016 because the National Budget has collapsed and the economy is on its knees.

HERE ARE THE FACTS

1. We have a budget deficit of over 20 Billion Kwacha, translating into almost half of the entire 2014/15 national budget.

2. The Public debt has ballooned to about 10 Billion Dollars from 3.5 Billion Dollars in 2011, representing an increase of about 187%.

3. With the issuance of the 1.25 Billion Dollars EuroBond, the debt levels will go beyond the recommended ”below 40% of the GDP threshold”. This means that as a country we will be spending most of our revenue on servicing public debt as opposed to investing this money in social and economic sectors. This will automatically reduce productivity as we are spending less on the productive sectors of the economy. In fact we are currently spending more than we are earning that is why we have this huge budget deficit and we have so far used about 13.7 Billion Kwacha on an unplanned activities due to the recklessness and fiscal indiscipline of Mr. Lungu and his Paya Future Government.

4. Investors have lost confidence in our country due to the FLAWED and INCOMPETENT manner in which the Paya Future Government is managing our economy. No investor is willing to invest in a sinking economy littered with INCONSISTENT and UNPREDICTABLE Policy pronouncements.

5. Companies are laying off workers and small businesses are folding up due to the MASSIVE LOAD SHEDDING compounded by high cost of doing business due to high fuel prices and high electricity tariffs.

6. Copper outputs and Copper prices have continued sliding down resulting into reduced revenue collection by the State. The country’s coffers are dry and we are surviving on Kaloba.

7. Our trade deficit has gone up as we are importing almost everything. As at May, 2015 our trade deficit was 300 million Dollars. Non traditional exports have declined by 27% in the last 6 months.

8. Kwacha YAGWA. The Kwacha has depreciated by about 59% in the last 6 Months from K4.5 per Dollar to K7.8 per Dollar

9. This PAYA FUTURE Government has not invested in the processing and manufacturing sector of the economy since they came into Government. There is inadequate investment in the productive sector to ensure high productivity, value addition and increased foreign exchange incomes.

These are the facts. So how then does Mr. Edgar Chagwa Lungu expect to create 500,000 jobs by 2016? He is late! He can’t fool the Zambian people any more. Their don’t Kubeba Gimmick has long expired. The PF can no longer use empty promises to hoodwink the Zambian voters.

If you look at his so called Youth Policy and Action Plan there is nothing new he is talking about. He says he wants to create 500,000 jobs through apprenticeship and internship. How is he going to do that when he has failed to run even a single Public University?

The Trade Schools, colleges and universities are in a state of disrepair. They have a critical shortage of staff, books, equipment, resources centers and other critical teaching and learning implements. There are literally no industries. All we have are shopping malls so how will his purported apprenticeship and internship program going to succeed?

He says he will create jobs by expanding low interest financial facilities targeting youth led businesses. Surely, the President has to be honest with himself. How many youths can access a loan from the bank? What are the requirements do the banks ask for for one to access a loan? What are the interest rates? The bank’s loan conditionalities are cumbersome and very few Youths have the necessary collateral to access loans from our banks.

Even Government-run financial schemes such as the Youth Empowerment Fund and the Citizens Economic Empowerment Fund have alluded the majority of our youths. These Schemes are inadequate, mismanaged and have highly been politicized. Only PF cadres and their cohorts are benefiting from the Youth Empowerment Fund and the Citizens Economic Empowerment Fund.

The story of creating 500,000 is indeed ilyashi ya muma Jameson.

Issued by:

Antonio Mwanza,

FDD Spokesperson.

This came to light during a closed door sitting of the SADC Heads of State and Government Summit in Gaborone, Botswana.

And the SADC Heads of State and Government has praised Zambia and Tanzania for being the only two countries with a food surplus in the region.

The summit has since urged Zambia and Tanzania to put in place interventions to provide relief to persons that suffered crop failure in the 2014-2015 farming season.

ZNBC’s Bangwe Naviley reports that President Edgar Lungu’s Special Assistant for Press and Public Relations Amos Chanda disclosed this to journalists after a closed door sitting of the summit.

And Mr Chanda said President Lungu is tomorrow expected to announce key interventions on food security and farmer productivity.

Zambia has been found with a positive food balance sheet following the looming hunger in the region.

He also said the fall in the commodity prices at the international market is affecting all Countries in the region including Zambia.

He also said the summit has urged Countries in the region to be cautious with borrowing to avoid disturbing their economies.

On energy, Mr. Chanda said SADC Chairperson and Botswana’s President Ian Khama has noted that poor rainfall is wrecking havoc in the region.

State house has dispelled as false, allegations that works on the Solwezi-Chingola road have stalled and contractors are not on site.

Speaking when he toured the road works today, State house Permanent Secretary Emmanuel Chilubanama dispelled the allegations made by MMD national secretary Raphael Nakacinda as false and misleading.

Mr Chilubanama said it is unfair for politicians to make unfounded claims and bring the name of the President into disrepute.

He said the contractors are on site and making detours so as not to disrupt the flow of traffic and wondered which works have stalled.

Mr Chilubanama said according to the contract, both Buildcon and China Geo Corporation are on schedule.

And Buildcon site agent Anthony Chongo told the Permanent Secretary that his firm was on course with the works.

Mr Chongo said so far about eight kilometers of the road has been ripped off.

Mr Nakacinda over the weekend alleged that works on the Solwezi-Chingola road have stalled and contractors are not on site when he appeared on a radio program in Solwezi.