By JCTR Executive Director, Father Alex Muyebe, S.J.
On September 22nd 2020, The Zambian Government applied to holders of its US$3 billion in Eurobonds to defer debt service payments for six months while it works on a debt-restructuring strategy. This period covers three coupon payments whose due dates are 14th October, 2020, 30th January, 2021 and 20th March, 2021, on the respective bonds. On 14th October, 2020 Zambia missed paying its coupon of US$42.5 million on $1 billion of dollar bonds due in 2024. Zambia was then given a 30-day grace period for coupon payment which expired on Friday 13th November. Now that Zambia’s Eurobond holders have rejected Government’s request for a six months interest payment freeze, a sovereign debt default has been triggered as Zambia is unable to meet the coupon payment obligations because of its constrained fiscal space.
The Government had requested interest payment holiday because it was very clear that it has no resources to meet the payment obligations as they become due either now or in the following months. National budgetary allocation to the social sector has been declining in the last five years. Allocations to this sector address directly the needs of the majority poor, vulnerable and marginalised. Social sector public spending is crucial for alleviating poverty and inequality and for saving lives and sustaining livelihoods.
In the absence of debt relief, Government will be compelled to undertake serious stringent fiscal, monetary and economic austerity measures which will gravely affect the social sector. The situation is going to become even worse in the event of sovereign default because the country is going to be blacklisted resulting in facing higher interest rates and lower credit rating which will make it difficult to borrow and to attract capital investment which the country badly needs to grow its economy to fight poverty and inequality.
For this reason, the Jesuit Centre for Theological Reflection (JCTR) is calling upon all concerned stakeholders (local, national, regional and international) to join hands and to show solidarity in advancing the noble cause to persuade Zambia’s creditors to consider any form of debt relief for the Zambian people. Zambia needs some space to address its indebtedness in a manner that will not harm the dignity of the lives of the millions of the Zambian people.
We are all aware that debt is a real existential threat to the provision of public service. JCTR is therefore calling upon Zambian leaders to undertake an honest and hard reflection on how and why this country has found itself in a state that puts in danger the lives of its citizens. From this reflection, Zambian leadership must present to the nation and the world a plan that will practically illustrate transformative and democratic practices to address the prevalent shortfalls in the country’s loan and debt contraction processes and in the public finance management.
Finally, JCTR is calling upon each and every Zambian to take keen interest and monitor this development. More importantly, JCTR is asking all the citizens to take it upon themselves to demand accountability and involvement in coming up with a roadmap of how our country is going to pull itself out of this undesired and dangerous debt crisis that has a potential of being a liability to be passed on to future generations. Government must demonstrate how Zambia shall never fall in such perilous indebtedness again.
Some of these losers offer no constructive ideas or solutions. I wonder how they get some of these roles. The country has leadership. Every nation is being impacted by coronvirus. Go to Europe and see how many companies have gone into administration and how many job losses have been incurred due to covid. Remember we live in a global economy. So when our trading partners are being affected negatively,it is very f00lish to think or expect that Zambia should remain immune to adverse effects and then to f00lishly blame the country’s leadership. For us we borrowed for infrastructure development and majority of those in lower incomes are happy and will see the effects in years to come. Rome was not built in a day.
Zambia is finally broke under the PF! (Permanent Failure) Seleni tupusushe ichalo!
Well, your request to join in asking for debt relief is denied, until there is a change of government.
Once we recover all the stolen money after this corrupt lot are booted out, we will be able to pay back most of this debt.
When we told you that the reckless borrowing would damage our country, you insulted us.
Citizens, this is not a joke. Things will become very difficult in Zed. Salaries will not keep up with commodity price increases. Jobs will go for sure. Dark clouds on the horizon.
And how will the new budget get financed? Even the Chinese are refusing to lend us money. We can not even be honest about how much we owe the Chinese.
This drunkard thief Lungu and his corrupt friends have well and truly messed up our country.
What happened to those $10million paid to street dealers Lazards who said they will be helped mentally retarded PF ministers?
Edgar can’t do anything because he’s preoccupied with the illegal 3rd term. It’ll be a serious illegality if he forces himself on the ballot next year. There’ll be consequences to him and those that will facilitate it. Let him dare us. We told him about reckless borrowing but he didn’t listen, we’ll deal with him when the immunity is lifted. We’ll count every coin
Politicking can only go so far. This is why we insist that politicians must respect interfaces with government implementors of their policies. Now see what has happened.
This KZ fella talks as if PF invented infrastructure spending. Expanding infrastructure as your population grows is the bear minimum any responsible government can do. Case in point, Botswana paid half the cost for the Kazungula Bridge. Even then, Zambia had problems paying its share on time. Yet Botswana boasts of a $6 Billion Sovereign Wealth fund, the Pula Fund established way back in 1993.
And you can expect this kind of financial catastrophe with the likes of Captain Cheese-head of the K2 Million is nothing fame in leadership; a pathetic lack of understanding of the value of money. That he can do no wrong in the eyes of the appointing authority is astonishing. Well, in that case Sir, we will show you the nearest exit if only so we can be…
Christian Republic of Zambia, the world’s one and only and doing very well, thank you. Debt crisis, wht debt crisis? December 27 is coming soon. It’s the anniversary of Zambia becoming the world’s one and only Christian Republic. Just call the nation to prayer and all will be well.
Yes Rome was not built in a day, but I am sure it cost less than $18 Billion in today’s money.
And who ever gave you the idea that we want you to build Rome? All we want is a modern village were everything works for everyone: kids get jobs when they get out of university, hospitals have medicines, people get paid a living wage and the police are not a mere security detail for the Easy Money Class, and our tax money is not spent onapartheid era military vehicles to suppress your own people.
“Every nation is being impacted by coronavirus.”
But Zambia’s debt problem was already there before covid-19 came on the scene.
The PF and ECL borrowed money recklessly and virtually wiped out all the economic gains from the MMD era.
Zambians can clearly see that.
JCTR – sorry. We are not joining you in asking you to ask for debt relief while we have this corrupt, dishonest and clueless lot running the affairs of our country. These have shown time and again that they are incapable of drafting or even following any roadmap. This is a typical case of GET RID and then try with another team. If you think I am being cynical, just ask them to tell you the real extent of our debt. We are in a very dire situation and to think that we will get out of it under the leadership of the crooks who got us into it in the first place is extreme folly.
Would you rather have a good credit rating defined by the western world whilst your people go without basic infrastructure for development? Or would you rather have infrastructure to aid development even though the western world label your financial situation as poor by their standards? Think deeply about that. Without spending you cannot have infrastructure development which is vital to drive our economy. You talk of mmd leaving some sort of surplus reserve and yet it was at the cost of having no basic infrastructure in most rural parts of Zambia. Just because your neighbour hood in Woodlands, kabulonga roma have roads etc does not not mean infrastructure development is not priority for poorer parts of the country. We are not leaders only for the few privileged.
Lungu ,Kaizar Zulu & Co have really ruined Zambia economically.They’re not literate on sound/prudent economic management hence the debt crisis.
I agree leadership is needed. Am not referring to change of government for now. I would suggest government takes very unpopular steps now. Britain did it way back. One of the unpopular things to do is to heavily tax its citizens. Why? Because it’s the only way out. We should not push debt to the next generation. It does not matter who is in leadership for now. Those that were adults in Levy Patrick Mwanawasa will remember how Zambians suffered due to wage freeze etc. British tax goes up to 45 percent. What would be unfair is to defer debt to our children.
Kaizar, Who says it must be a case of either good credit rating or infrastructure development? The stress should have been on sustainable borrowing which clearly was not the case. Also, there has been poor management of public funds. We could have gotten so much infrastructure set up if we had cut out the corruption, over priced tenders and awarding of tenders to cadres who did shoddy work.
Not when one is contemplating to borrow another plane
It is a waste of time when the government is not willing to come in open and tell the nation how much money it has borrowed before coming up with ways or methods to help in this matter. Now this affects every Zambian regardless political affiliation. Pride not to listen to Zambians who knows how to run economy has put us in this mess. Let the top administration tell us the truth how much it has borrowed then we can help. This is how foolish we can be by spending time and money on commission of privatization instead of building the economy. Now I do not know where the money to spend on the commission of privatization and to compensate those who never got paid terminal benefits after the companies were sold. Priorities first and maybe later, if necessary, after we have built our economy we…
Viva Pabwato !
They could have paid the debt if they didn’t squander the money on fire tenders that have never put out any fire.
WE BORROW SO MUCH BECAUSE THE ECONOMY OR GDP IS SMALL.
LET US GROW THE ECONOMY.
GROW MAIZE FOR EXPORTS
GROW EVEN MARIJUANA FOR EXPORTS
CHINA SHOULD BE BUILDING FACTORIES NOT MALLS IN ZAMBIA
LET US CHANGE THE ECONOMIC MODEL
PF HAS MISSHANDLED, MISSUSED, MISSPLANNED,MISSPRIOTIZED, MISSCOMMUNICATED, MISSREPRESENTED, MISSINGAGED, MISSADMINISTERED, MISSCONDUCTED, MISSFRAMEMED, MISSCAULCULATED, MISSINTRODUCED, MISSTRANSFORMED, MISSUNDERSTOOD, MISSECONOMZED, MISSINDUSTRIALIZED, MISSLEAD AND MISSRULED ZAMBIANS FOR THE PAST SEVEN YEARS.
SO KUYA BEBELE.
ONLY A MAD PERSON WILL LINK PF TO GOOD LEADERSHIP.
Zambia debt crisis just the ears of the hippopotamus in Africa’s perilous fiscal position
Zambia debt crisis just the ears of the hippopotamus in Africa’s perilous fiscal position
Even in the less superstitious view, Friday the 13th is an unlucky day. In the African sovereign finance world, Friday 13 November 2020 will be remembered as the day in which one of the member states, Zambia, failed to meet its debt servicing commitments of $225-million due to the country’s lenders.
It is tempting to ascribe the country’s failure to meet its debt obligations to the Covid-19 pandemic. However, Zambia and many Africa watchers have seen this coming. A recent seminar held by the Konrad Adenauer Stiftung and the Brenthurst Foundation shed more light on Zambia’s path to chronic indebtedness…
BA KZ most of the people here are UPND people who think by tribe. Facts are there that the and World is impacted Covid19…..Many Nations like America, Britain are having issue because of covid19 but here…..the Animals from the Animal farm are still blaming Government for defalting insteady of hipping the blame on the impact of covid19………but the truth is that no matter how upnd allucinate here on social media they will not win 2021 elections, they dont have people at heart……..thats why marry get divoced……..UPND and thier HH have always wanted to be on top…..in past elections they have worked with every politician and have felled to win…….The need to work national character than upsetting people from other regions those who support PF and President Lungu……..