The Zambian Digest Logo
19.8 C
Lusaka
Monday, February 10, 2025
The Zambian Digest Logo

GRZ Borrows US$1.66 Billion Since 2021…Reveals national assets grab threat by fuel suppliers owed money

Must read

Finance Minister Dr. Situmbeko Musokotwane has disclosed that the UPND government has borrowed US$1.66 billion in external debt in the nearly three years it has been in office.

And Musokotwane says that some oil companies owed money for fuel supplied prior to 2022 have threatened to grab Zambia’s assets.

Appearing on last Sunday’s COSTA show on Diamond Television, Musokotwane said the debt has modestly increased by 12.7%, but is nowhere near the rate at which the previous administration contracted debt, nor is it close to any of the figures some social media dramatists have been peddling.

Domestic debt has gone up from K194 billion to K225 billion in the same period. That’s an increase of 5% average per annum, and 16% overall.

He explained that his government has been compelled to turn to flexible borrowing in order to service the huge amounts of the legacy debt the previous administration incurred. Musokotwane has consistently stated that the government now borrows concessionary funding, which attracts very little interest charges, or takes grants at zero interest.

Zambia defaulted on its external debt when it failed to pay a Eurobond coupon in 2020, earning itself the unenviable status of Africa’s first COVID pandemic-era defaulter.

The Hichilema government earlier this year restructured K74 billion in international bonds, buying the country critical breathing space and a chance to reclaim its reputation.

Musokotwane said that the debt restructuring had saved Zambia from having to repay its debts at more expensive rates after defaulting.

“Since 2020, we have not been servicing our debts. We defaulted in 2020 and said we can’t pay but defaulting and folding up your arms and saying I’ll never pay cannot be the ultimate answer because the owners of the money have been on us saying pay us,” Dr. Musokotwane explained.

“Unlike an individual who, perhaps, may run into the forest or hide in the bush, as a country you have nowhere to hide, so we have to pay.”

He continued, “But the good thing is that even with these numbers, after restructuring, these numbers are much smaller than would be the case if we were to pay unstructured debt.”

Meanwhile, Musokotwane has reiterated that the government had also prioritized the payment of over US$800 million debt owed to oil marketing companies who supplied fuel under the previous regime, and this was the reason the government had allocated 36.3% [K15.2 billion] of its recently proposed K41.9 billion supplementary budget to offsetting part of the debt owed to fuel suppliers.

“This oil was supplied to Zambia and we did not clear the bills and day in day out, people are queuing up here (Ministry of Finance), seeing the ST [Secretary to the Treasury] and saying pay us,” he said. “Some have even threatened to go to court. Some have even threatened to grab Zambian assets abroad, so we can’t fold up our arms and pretend that these debts don’t exist, they exist and we have to pay.”

Dr. Musokotwane also stressed that the government had been moving towards guiding Zambia through to its essential responsibility of offsetting the immense debt incurred by the former regime under flexible means and terms.

“We are borrowing to pay the debt because first, we have to pay the debts. The ones that we are paying are not banks or financial institutions, these are suppliers of fuel so they want their money back” he said.

“Secondly, and perhaps even more importantly, the contracts that were signed to supply this fuel had very punitive clauses for failure to pay, so it makes sense to borrow money cheaply to pay off the expensive debt.”

The Minister also revealed that the government was ready to engage the fuel suppliers in order renegotiate the terms of payment agreed with the previous regime.

“If you have to negotiate and agree then you don’t pay, you only annoy the person that you borrowed from. So, now that the money is on the table, it’s time to renegotiate and the moment we agree, we pay the suppliers.”

“Credibility in negotiations when you are sitting on money is more enhanced, so that is why we are going to do it now,” he asserted.

More articles

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest article