Parliament heard today that Zambia’s current external debt stands at US$1.2 billion. The country’s debt in 2005 stood at US$500 million after Zambia’s US$7 billion was forgiven following the attainment of the Highly Indebted Poor Countries (HIPC) completion point
Acting Finance and National Planning Minister Peter Daka told Parliament that Zambia’s current debt is lower than most countries in the region.
He said Zambia cannot develop with borrowing and that government is borrowing at a reasonable interest of point seven, five percent while the local interest stands at 15%.
He adds that government has to borrow in order to sustain economic growth in the country. Mr Daka says Zambia is not at any risk of falling in the unsustainable debt trap with government’s continued borrowing because government has the capacity to pay back all its loans.
And Mr Daka says government has reduced on borrowing as a result of the borrowing policy.
QFM
Is it Zambia cannot develop with borrowing or without ?
:d The evils of our leaders, the docility of the masses .It shall Not be forgiven this time lol.
Daka is the acting minister?where is the other guy? these hell-bound evil villains have taken us for a ride for too long…do they assume we are retarded ? They will feel the wrath of Zambians soon
Only hope this Daka fellow is correct. Why are evil Zambians afraid of hiring a capable individual. Someone answer my question and two thirds of our problems are solved.
🙂 Chips I feel your pain lol.
From these figures it appears that we are borrowing roughly about $160m a year and if our local ineterest rate is twice as high as what we are borrowing at, we should be repaying at least $80m a year. In retrospective we should be only be owing $800m now. Unfortunately the Zambian govt has agreed a repayment period that will see our children and grand children still owing and effectively being externally controlled. We need to cut the trend let us suffer now so that our children won’t. Read Dambiso Moyo’s DEAD AID.
STOP BORROWING from other countries. Honestly, why can’t Zambia borrow from it’s own people? what a nation!
Minister of Finance, I am mad @ your ministry! you don’t know how to borrow from your own people? I cry for you Zambia my Beloved Country.
Let the whole nation tighten up the belts and let the leaders travel less at least that would help save a Ngwee or rather a Kwacha.
Like I have always said and I will say it again! The generation of our fathers really behave like little children. Not long ago the NCC lead by Dora Siliya and George Kunda made sure that the clause compelling a debate on borrowing was removed from the proposed constitution. There was no noise even from the opposition. Mwanawasa left us with $500 million. Which id.iot went and borrowed $700 million? We want to know who did that and for what reason. Someone ought to go to prison!
Let’s see. We have $1.7 billion in ‘reserves’ and we owe $1.2 billion. If we really, really, really have these reserves stashed somewhere why doesn’t GRZ pay off the debt and still leave a very healthy $0.5 billion to monkey around with?
Methinks the reserves are a myth, a creation of the imagination. If you are in doubt, walk up to BOZ on Cairo Road and ask the authorities to show you the money. It is your right as a citizen of Zambia to inspect your money. If they won’t show it to you, ask to speak to someone who has seen it. You will be very disappointed.
As for the debt, it is real. As real as Michael Sata’s two children with Prudence. Or is it Florence? Whatever.
Because of the structural characteristics of the Zambian economy the treasury will always be left with very few options in this area. This is largely on account of the low savings rate in the country. Indeed it is correct that it would imprudent for any country in this day and age to exist without borrowings which is why for example South Africa had a successful bond issue the day before yesterday and why on the other side of the scale Dubai is in the unfortunate position it is write now due to its recent default. Regarding the reserve position, it is erroneous to imagine this as being the same as having K200,000 and going to borrow K150,000 when that is all you need. It is a little bit deeper than that and if I have time I will elaborate over the weekend. Cannot do it in 20 characters!!
Zambia and it’s degrees holding president bafya.
“The inability of those in power to still the voices of their own consciences is the great force leading to change.”
Dr. Kenneth Kaunda
Good Morning
“He adds that government has to borrow in order to sustain economic growth in the country.”
I am not an economist but this sounds very much like one step forward and two steps backwards to me. Can Mr. Daka elaborate on which parts of the economy and how high the percentage of it is actually dependant on borrowed funds? It will be quite a rude shock, for instance, to discover that the huge profits that are hauled in by the booming mining industry largely serve the purpose of debt repayment. Money desperately needed for health and education!
We have 1.8 billion in reserves but we borrow 1,2 billion. Can somone like True Capitalist, Senior Citizen etc. help me understand why? To me, it is like having a 10 million Kwacha loan from the bank when you have K11 milllion in your savings. Why not pay off the loan? The interest you get on your savings is far less than what you pay on your loan. Borrowing is a curse and no one should indulge in it willy-nilly.
#6 Amayama and #11 Nindo
Top posts lads
Acting Finance and National Planning Minister Peter Daka told Parliament that Zambia’s current debt is lower than most countries in the region. this statement from Daka sums up the caliber of this deputy finance minister…inept cretin SIMPLES!
what shallow reasoning!!! no 17 i agree with you, i suppose they think it makes it okay if your debt is lower than that of your neighbours. typical zambian mentality of always pitting against the other guy even for negative s***!! this brings home the problem with our leaders right there. i mean we have people in really strategic offices who have no idea whatsoever of the consequencies of their actions or inactions even in the immediate terms….. lets not even talk about the long term.
if it was anything to do with Sata,HH or mmd campaigns,or Lazo,we would have been battered with lengthy incoherent cut and paste drivel from the usual suspects,they are nowhere to be seen,2011 is not far off,for those of you in Diplomatic posts,like Senior Citizen aka BK,better start preparing for fairwell parties,coz 1 your contracts are expiring 2 with the financial scandals,you can bet your last dollar,RB will have a field day,as for the other loudmouths,pray hard that mmd wins,otherwise,it will be a stressful and emotional slide down to reality
#16 THE SAINT
Yes we do have reserves of $1.8 billion USD and a debt of $1.2 billion USD. Zambia cannot pay off the debt in one sweep because if it did so, it would affect the foreign exchange rate of the Kwacha against the USD. Having too much USD leaving the economy will result in USD shortages which will weaken the Kwacha and reduce confidence in trade, debt and equity investments from foreign investors. What we want is a stable currency more especially in this era of globalization.
The $1.8 billion USD also signify that Zambia is able to meet its debt obligations. It is a signal to lenders that if Zambia borrowed, they are able to pay back.
That is my analysis of the issue anyway.
Coming to the issue of debt financing.
Many countries have to borrow money in one form or another in order to meet their planned investments. Other countries like Brazil, Uruguay, Philippines issue bonds to borrow from foreign investors. Other countries like Ghana have also issued bonds before in order to borrow money to meet their investments.
Zambia is in the process of acquiring a credit rating. A good credit rating will possibly see Zambia borrowing at a much lower interest rate and with increasing reserves, Zambia looks pretty positive in terms of debt financing.
Is it like this then. It is easier to borrow if you are in employment than if you are not? At least Ka salary is surity enough for Lunda-Lunda guys to advance you some money. Usually, over borrowing leads to misery and that is what the government is doing. We will be back to square one sooner than later. Come 2012 this figure will even triple.
#19. So, Citizen is truly Ben Kangwa?You know, I used really like this chap as a tv or radio announcer. I can’t believe how low he has sunk lupiya’s bottoms. I absolutely, have no shred of respect for him anymore.
The Zambian government is full of bakoni boy.
#20 and 21. Your response is quite convincing to a lay person. I believe you only used defective tools of analysis. Hope you didnt mean to mislead. Fistly, Zambia has been borrowing since 1964. We should have had a good credit rating by now. We dont pay back hence it gets to HIPEC stages. You better improve your credit rating by redeeming your debt through settlements and not prolonging the debt. Secondly, it is madness to have a debt ratio higher than your liquidity. I mean we owe more than we have. Our balance sheet must be health on assets rather than on liabilities side. If its true we have that money in reserves, then we must liqudate this debt so that we can save on interest accruals. The longer the princile debt the more you pay on iterests. You can pay off and borrow afresh
#3 Chips. Yes Zambians are retards. Just look at the posts here!:d
It is true, if no payment is made the interest will be accruing which will have an impact on our economy in the future, our economy has always been weak for a long time. Zambia lack visionary and people who are patriotic to the Country. Politics leaders are not gods, they are just mortals so those who advise them bear the blame though ” blaming is the wrong way of having solution and attaining bright futuristic for our country”. Let us help our leaders by remaining them of their responsibilities to the people.
#26 Contd.
And look at what is obtaining in Zed! Reading all posts here, you are left with more questions than answers.
How could you say we can`t pay back because it`s going to weaken our (already weakened) Kwacha? In the mean time your debts are going up! From 500 to 1.2 billion? Now that is colossal
If big economies like Britain, the US, China, France were forced recently to off load, why is Zambia dragging it`s feet?
The fact is there is no money in reserve. Don`t listen to pokies from this over stayed government and yet to stay longer by the look of things.
Brace yourselves!
Zimbabwe has a ten billion bill. We are heading that direction.
What with people in office we are still better off than our neighbours! What a way to measure where you are!
Having debt is not a problem in itself. It is the reasons why you have to borrow that are important. Are we borrowing in order to invest? What are we investing in, and what are the future returns on the investment? If you borrow in order to build football stadia, then do not expect a return on the investment. My understanding is that for such vast sums of money, we should not be borrowing for consumption, rather it should be for investment in productive assets. Why do you need to borrow from China in order to build a road? You have local materials and manpower to do this. Yes interest rates might be higher, but your domestic monetary and fiscal policies should be geared to ensuring that low interest rates.
Mr. Capitalist, you have spoken sense. Pipo dont comment for the sake of it like your father the former convict, adulterer,and viper ….
Mr Capitalist, I beg to differ with you. If you were to ask an ordinary person, I am sure that they would tell you that they would like to have food on the table, access to education and healthcare, possibly due to having a job. The only people who care about the exchange rate or trade are the 10% or so of the population who are comperatively better off. Why have reserves when people die because of Cholera?? Why have reserves when hospitals lack drugs to treat the sick? Why have reserves when people are dying of starvation? In my opinion, priorities are all mixed up.
# 17, #17
I did not want to contribute to this blog, BUT cos of you!!!!!!! fool
The problem is that you are a fool, you have mentioned my face mask betters and you think i am a DIPLOMAT, How foolish for you to think like this, I am offended.
FLAGS are controlled by LT, for reasons best known to themselves, they give wrong flags.
I live in Zambia, and work in Zambia, I work hard, to earn what i have, I don’t believe in politicians like most of you do. If you are straggling with life, please keep your poverty to your self, if yoursnot the governments even the so call PACK will not push you out of poverty if you don’t see opportunities
EVEN yourself is leaving on borrowing, Obama Borrowed from China,
A general rule of thumb: massive trade surplus = large foreign reserves. Good examples of this simple rule are Brazil, Russia, India, Saudi Arabia and Taiwan. These countries are mercantilist; local industries generate these surpluses and the proceeds remain in the home countries.
Copper accounts for a large portion of our export earnings, some say as high as 70% of gross. The copper mines are in the hands of foreign companies. One can assume that any trade surplus that this country enjoys goes back to home countries of the mining houses. We are left with nothing to haul into our kitty.
Reserves at BOZ are an opium of the masses, a product of financial engineering. They do not exist in form or substance.
In January I remember RB saying we had surplus, and by March he and his sons have cleaned out the treasury and borrowed 1.2 billion US$ more? Where did all that Money go? I supposed Magande was right when he said RB was misrepresenting the fact about the financial situation in Zambia. So if Magande seem to be the only one that knows what is going on, lets put him in office 2011
Yes, what was the US$70 million used for? The roads are in a deplorable state like land mines were planted all over expect Independence Ave. There is no medicine in our clinics not even panadol. Education standards are non existent. Failing rates in all grades is unbelieveable. Kabwata consitutency alone has got potholes like all african countries put together. It’s sickening…..
I pray that one day Dickson Jere and his boss should be give a ride at 100km/hr on one of our potholed roads. They will cry like babies:((:((:((
Ba citizen now contribute on this issue ,not amailele you always say.tell us where you have taken the money to.One day naiwe ukalubulula.friend medical check-ups have started now that the supreme…….
On: He said Zambia cannot develop with borrowing; is really a bad mentality in our leaders. If govt has money some where, why not ‘borrow’ from there after all it will be returned with zero interest. Why borrow from other countries where you will need to pay bach with interest? Is our govt a kind of stranded millionare?
Stupid leaders is equal to stupid decisions hence the debt…. I dont blame our retarted leaders only but also our voiceless coward youths………….what next?zambia under privatisation
i dont see freedom of speech here; i write something and its automatically edited by the lusaka times;
you are all like stupid Lupia Banda and his brainless cabinet ministers
Loans make the borrower be a slave to a lender and it is difficult to come out of such a situation. Our indebtedness has gone up by 58.33% from 2005 to date. This is an indication that there has been no political will to liquidate this debt. It is possible to finance programs from our own generated resources. Unfortunately the minister has not given us the balance sheet so that we can evaluate the situation.
It doesnt matter whether we are lower than the rest in the Region, fact is you have borrowed money which we dont where it has been spent. At least we saw UNZA, ZIT NORTECH UTH etc from KK’s 6billion US$. Tell us where you spent this money is it the Nutty Cases Coven (NCC) or on the trips made by our RB?
“…Zambia is not at any risk of falling in the unsustainable debt trap with government’s continued borrowing because government has the capacity to pay back all its loans” this statement has really upset me… If we have the capacity why aint we paying? In your far fetched wisdom you would rather accrue more interest ba Daka! Zambia is not at risk my foot!!!
Zambia’s reserves(assets) are far greater than the debt, so if the creditors decided to call the debt we can repay without any difficulties.
#46 Yes you are right in theory, but in practice it means that you would not be able to import anything at least for 6 months. The reserves are very different from debt. From your approach, that is like borrowing money from Micro Finance institution and putting it in your account in a bank. You might appear to have money, but eventually that money has to go back to those people you borrowed it from. Unless you put the money into a productive asset that is going to give a return higher than your debt, it is meaningless. I am sure that the kwacha exchange rate will reflect such high levels of external debt. If you want to send money to Zambia, wait until next week when the kwacha will be weaker.
Borrowing alone is not wrong. The issue is what you borrow for. This is simple business, if you feel that the gains from borrowing are higher then the cost tthen you borrow. Look at America, they depend on Chinese money to prop u their economy and actually when Obama became president one of his first initiatives was to send his secretary to the treasury to Chine to negotiate for China not to pull the plug. I dissagree with Peter Daka that a country cant develop without debt. But i say that borrowing especilly in a small country like Zambia is very esential
I have just seen the ‘Post’ and it says that Zambia has allegedly obtained a loan from China for a Chinese company to sink 6000 bore holes! Enough said. If this is true, then Zambia will NEVER get anywhere.
LT please read ur shit b4 u post it to make sure the gramma is in place.this is dissapointing.
which countries do u always borrow money from? What about them, where do they borrow?
# 51 Kadyabila, some countries have higher credit ratings and can easily borrow from financial institutions. Its a very complex web which you would have to study to undertsand. But all in all my stand is debt is essential but it should be used on tthe right projects
The UK is in deep debt so much that their credit rating is threatened. Greece is in trouble due to too much debt. America’s debt is so much that it has become priuority no.1. The credit crunch oushed so many govts in debt as they still have to provide services despite falling income due to recession. Also Western Govts pumped billions of $ into banks to prevent them from collapsing.
As others have said, what matters is purpose for borrowing and your ability to pay back. Zambian govt should be very careful.
Also please remember that Zambia’s effective reserves are about $1.2bn, having come down from $1.9bn as they used some money to keep the Kwacha going during recession. Current $1.7bn includes a loan – called drawing rights from IMF/World Bank.
Be informed.
BBC reports 05Mar10:
1) Meanwhile, Germany passed its budget for 2010, with borrowing set to soar this year.
New borrowing is expected to reach 80.2bn euros ($109bn; £72.5bn) – double the previous highest debt record, set in 1996. However this is less than the 85.8bn euros initially proposed by the govt
2) On Thursday, the Greek government went to the financial markets to borrow money and saw its 5bn euro ($6.8bn; £4.5bn) bond issue oversubscribed. But Greece will need to borrow more in the coming months – more than $70bn for the year as a whole.