THE Government is discussing with development partners, including the International Monetary Fund (IMF), on how to utilise some of the accrued international reserves for infrastructure development, Finance and National Planning Minister Situmbeko Musokotwane has said.
Bank of Zambia (BoZ) governor Caleb Fundanga recently announced that the foreign reserves had risen to nearly US$2 billion, which has been said to be the highest Zambia has ever accumulated in 38 years.
There have been calls for the Government to consider diverting into gold reserves to take advantage of the growingly favourable prices of the metal on the international commodity markets.
But Dr Musokotwane said in Lusaka that the Government would not divert the reserves into buying and stocking of gold reserves because it was a risky business, as the prices of the metal was vulnerable in the commodity market.
“It is dangerous to put money into gold because the prices are not stable, as a commodity,” he said.[quote]
He said the Government was confident that the current level of the international reserves was safe and would like to plough part of the reserves to invest in infrastructure development.
“At the levels of the foreign reserves where we are, we think that it is safe. Investments take place with these reserves and we want to invest some of the money into the development of infrastructure,” he said.
The Government was talking to the IMF because the fund had room for Zambia to borrow more and use the finances on developmental projects.
“We are talking to a number of partners, even the IMF. There is room for us to borrow a little bit more with the level of reserves. Most of the money will be for infrastructure, and the focus will be on power infrastructure and roads,” he said.
The gross international reserves increased to $1,924.2 million in December 2009, up from $1,739.9 million at the end of September and from $1,171.17 in June in the same year, after the country received more than $600 million from the IMF under the special drawing rights.
Zambia recorded an increase in capital and financial accounts after receipt of the SDRs amount of $627.3 million, the receipt of budget support from the European Union of $43 million and the receipt of a $80 million Poverty Reduction and Growth Facility (PRGF) loan from the IMF, which coupled with BoZ purchases of foreign exchange from the market, improved the reserves.
[Times of Zambia]
VICE-President and justice minister George Kunda has recommended to Cabinet to pay about K5 billion to Lusaka-based parliamentarians, most of whom are ministers, attending the National Constitutional Conference (NCC) as facilitation allowance. Backdated to December 19, 2007 when the NCC started its sittings.
Vice-President Kunda will be paid K77.3 million, finance minister Dr Situmbeko Musokotwane K70.8 million while NCC chairperson Chifumu Banda K88.4 million. Ministers Lieutenant General Gen Ronnie Shikapwasha (information), Peter Daka (agriculture), Sarah Sayifwanda (gender), Kenneth Chipungu (sports), deputy ministers Angela Cifire (information), Moses Muteteka (local government), Todd Chilembo (justice), Friday Malwa (community development), Mwangala Mubita (tourism) & Mubika Mubika
This Government is so so wasteful. WE need to Kick out the MMD from Power, with the LT blocking us or not, this message must be sent our loud and clear, enough with the MMD Govt., now they are using Kafupi Wife snatcher to campaign for them. LOL. A drawning man can even hang on a straw or a leaf thinking it will make him float. Thats what the MMD is doing.
Lets Link up Chipata to Mpika,Kasama to Mansa using such funds
We better get credible and proven contractors to handle the infrastructure building, not the same old players who have swindled the nation out of billions through shoddy work. Time for the govt to get serious about this and give Zambia some world-class infrastructure we all can be proud of. Govt should get serious and crack down on “fly-by contractors” hindering progress in our country!
It will be a shame to wake up three or four years from now and still have trenches on our roads, power blackouts, hospitals that look like they are about to be abandoned, university facilities that are more suited for monkey colonies than humans, etc. This is a lot of money not to have any tangible results when all is said and done. NOW SHOW US WHAT YOU ARE MADE OF Mr. President, NOMORE EXCUSES!!
Surely we really need to ask donors and IMF how we can use these monies. Why can’t they ask parliament on how to go about using part of this money. Unless am wrong these are our monies sitting in banks in donor countries and at IMF etc.So why should we ask them on how to use the same.
#5 couldn’t agree with you any better.Do Zambians vote for Donors or GRZ. Sad state if Donors have to be consulted over the use of reserve funds. I thought we gained independence on 24th Oct 1964.
Kunda must be stoped from his inteded fraud of public funds to pay NCC members. We all know that the NCC is developmentaly importent. So there is no need to pay the so called lusaka based MPs. Kunda wants them to be paid housing allowances yet they live in their homes in Lusaka were the NCC sits. What madennes is this? He wants to be paid equal travelling allowances with MPs who come from far and wide? what is wrong with this Man and his cabinet? Does it cost him R300 pin per day to travel from Kabulonga to Mulungushi? Is so then how about an MP from Mwinilunga who he wants to match the allowance with? Red lips must be arrested! Please talk to Zambians, they will tell you what to use their money for. That is not worldbank’s money!. Mwatwala kwisa amano ba MMD? Just for once, please think
“Chimbwi no plan” I thought we had the fifth national development plan and the vision 2030 to provide a development framework we desire as a country. Isn’t this an indictment on the capabilities of our so-called leaders to foster development?
” But Dr Musokotwane said in Lusaka that the Government would not divert the reserves into buying and stocking of gold reserves because it was a risky business, as the prices of the metal was vulnerable in the commodity market. ”
That’s absolutely absurd. Gold is going to rise, especially in this inflationary environment. And the Zambian government can hedge it’s reserves on the financial markets.
I cant believe that we need to ask the donors on that matter, something is fish here!
To me Dr Msokotwane is a pure example of how not only having a degree is enough. Phd in economics and he just talks theories. Hallo! this is real life not a lecture!
Dr. musokotwane,
While you are at it, please ask your number how you can improve the sex life in your home.
#5, 6, 10: Before making comments, please read how the reserves came about, and what international obligations you signed for during HIPC. And consider what would happen in the event that Zambia needs the support of those institutions again. While on this topic, my suggestion to Dr Musokotwane is to use the money to start work on power infrasturcture at Itezitezi and Kafue gorge lower without delay as top priority. Roads have willing donors and lenders all the time.
#11 Zedian: Your ignorance is quite obvious. Are you sure it is not you who needs an education?
As for #12 Hachi, not worth a comment but because yours may be a case of life threatening verbal cholera, please report yourself to the nearest cholera centre.
This sounds funny… but surely why should we ask our donors to tell us what to do with our reserves?As a nation have we run out of projects to implement?Suppose the donors say that we donate the money to Haiti what is going to happen?
Let’s not get too excited now that we have some money, though some of it is borrowed money. No wonder you have to consult the IMF, the owners.
Listen to bcc news today regarding South Korea:
Separately on Tuesday, it was also revealed that South Korea’s foreign exchange reserves reached an all-time high in January.
They totalled $273.7bn, a rise of $3.7bn from December.
Foreign currency reserves are seen as a useful buffer against a raft of financial problems.
Other countries with substantial holdings include China and Russia
# 8 Imwe Ba MrK. Have you just learnt about hedging and You just Know Gold as the only Hedging instrument? The Minister is right. The best Hedge we can do is agriculture and not Gold. Gold is overpriced at the moment and it’s only direction is downward and if you have been indeed following the markets you will realise that Gold is stuck in a straight channel. All the money has been made. Inflation is still benign because of reduced consumer spending and weakness in world economy. Besides nobody buys an investment at such a high price as Gold. Anybody who bought Gold last last Nov have lost 10% of their money already and kicking themselves now. Speculation is not the Govt’s job. The Best hedge the Govt can deploy now is to develop the infrastructure of the country..and we are doing that
# 13 Pakati. That’s a great contribution. Please advise where we can read about HIPC conditions. I am in the UK.
#5,6,8,10: The truth is we dont have leaders who ve a plan to emancipate Zambia from the cobweb of poverty and mediocrity. This is the money that you borrowed or were given, must u ask for permission on how to use it? If you dont ve plans or vision u begin to waste the little you have. Thats why they are busy trying to bach date the payment of NCC members etc. God help us from the short sighted pipo. One day we shall remind them while they will be seeing the country changing at a supersonic speed. Pray you dont die early.
Infrastructure built by the Japaneese will be a good idea. The Japaneese make the best roads. Access to Livingstone (tourism) and a ring road to connect all the towns. Without road access agriculture and tourism won’t work.
we are now in the semi-finals and it is prudent for govt to back-off from the reserve fund till we have a new government with a fresh mandate and the timing gives suspicion as to what the intention is. it is obvious that there are hidden motives behind this scheme. this is a smoking gun watch out.
Why do we have to pay these Lusaka based leaders when they’re already drawing government salaries? If they were from private sector, we could say it is because we pulled them away from their business activities. Did these leaders forego their salaries & benefits while at NCC? Surely when they’re sitting at NCC, they are not in their offices at the same time, so why pay them twice?
“VICE-President and justice minister George Kunda has recommended to Cabinet to pay about K5 billion to Lusaka-based parliamentarians, most of whom are ministers, attending the National Constitutional Conference (NCC) as facilitation allowance”.
About this reserve, what is Zambia’s debt ratio? Probably that will help us somehow understand were this Musokotwane is coming from?
This ratio indicates what proportion of debt a nation has relative to its assets. The measure gives an idea to the leverage of the nation along with the potential risks the nation faces in terms of its debt-load.
Debt Ratio = total debt/Total Assets.
Also we have to understand the nations Acid-Test Ratio. Nations with ratios of less than 1 are looked at with extreme caution. Zambia falls below zero.
Lets us hope we are not being PUNKED by these numbers they throw around exciting some supposedly learned individuals but who fail to understand the truth behind those numbers. The $2 Billion so talked about is not the highest Zambia has had in 38 years. This figure Fundanga is giving is not taking in consideration of value. It is like having K100,000 today as compared to having K100,000 in 1972.
#3 Timosheko-Main Chama
That is exactly what I had in mind. It does not need to be tarred road but an all weather gravel road linking Eastern Province through Mpika and Chipata through Mfuwe is a good investment. The other is Mongu an Livingstone through Sesheke.
Bozo, there are no funds.
17 MMD Chief Bootlicker,
Please don’t presume I ‘just learned about hedging’. And I am not talking about gold as a hedge, I am talking about hedging the price of gold to protect the value of gold reserves, using futures and options.
Frankly I don’t know why the ministry does not also hedge the price of copper, considering Zambia is one of the world’s leading copper exporters. The mines could even pay the government with call options, which would be risk free profit opportunity for the government, in case copper prices rose.
Ok, I apologize. What I said earlier was plain wrong. I got a bit emotional.
My point was, how can you go to ask a question like this to someone who has his own interests to serve?
When the late Ronald Penza was named as the best Finance Minister by the IMF, I was very concerned because I took it to mean that he was doing things that were satisfying the IMF; this did not necessarily mean in the interest of the nation.
If I suddenly declared that my neighbours wife was the best wife in Kabulonga, my neighbour should be very concerned because it would mean his wife is doing something that is pleasing to me; and the posibilities are endless.
The donors have their own real masters whom they must please. Musokotwane’s real masters are us the people of Zambia. He must turn to us to…
Are these people infants or what? The Americans and the British are talking about reducing there debt and you are thinking of borrowing against the little savings we have? The world bank will be more than happy to lend you the money! Don’t forget that they are the world shilocks and if our leaders behave like a spoilt first year student with a new credit card, they will be more that willing to lend. After all it is business. Get some common sense that has been severely lacking for the past 40 years. The generation of our fathers really behave like little children! I despire sometimes.. I really do.
1. The money was not generated by well performing Zambian economy- they are handouts from our erstwhile masters – zionist bankers. They tell our government what to do with the money. Any budget drawn up has to meet IMF and World Bank guidleines,i.e. signoff. The government is not answerable to its people but to the money lenders. There is no free lunch especially when dealing with banksters. Why not use the money to pay off the never ending interest on the mountain of debt? This would improve our credit worthiness in the eyes of our masters, no?. Oh, please Sir, can I have some more? and the bankster opens your wallet and lends you your own money paid in blood and sweat. Get rid of fiat currency and there will be no debt to worry about.
Ati Number 1 are you sure of those figures, they are ASTOUNDING AND EVERY ZAMBIAN HAS THE RIGHT TO KNOW
Ati Number 1 are you sure of those figures, they are ASTOUNDING AND EVERY ZAMBIAN HAS THE RIGHT TO KNOW
oh and #1 how can we get the individual allowances recieved by each member of the commision
#17 i would like your view on the comment by #1 and why i ask is that you always give very reasonable points in your comments and i would like your take on this one. .. . . :)>-