Zambia is slipping back into heavy indebtedness – Magande
Zambia is slipping back into heavy indebtedness – MagandeBy Chiwoyu Sinyangwe
Thu 20 May 2010, 04:01 CAT
NG’ANDU Magande has observed that Zambia is racing back into heavy indebtedness as China continues to dangle billions of dollar worth of loans under a very secretive framework.
Recently, Chinese financial institutions like the China Development Bank (CDB) have committed to lend the country about US $5 billion for investment in mining and power generation like the Kafue Gorge Lower (KGL) as China increases its hegemony in the country.
Commenting on the development, Magande expressed concern that China had dominated the class of international lenders to the country.
The former finance minister doubted Zambia’s ability to pay back the huge loans it was contracting currently.
“You are going everything China…China. Why China…China? China was not a member of the HIPC Heavily Indebted Poor Countries initiative and if we may want to know, what are the conditions for the Chinese loans?” Magande questioned.
“From IDA International Development Association of the World Bank, we are getting loans for 10 years grace period with 40 years repayment period. So, this money…the US $1 billion we are getting for Kafue Gorge Lower what are the conditions? We just finished paying for Kariba loan which we got in 1963 in 2003. If that is what we are getting from the Chinese, we are getting the concessional loans, the Zambians want to know and these are the conditions we had agreed to when we said can you forgive us the current debt. We said we were going to come up with a debt management strategy where we would ensure that every loan that comes. There was disclosure to the Zambian people of the conditions and what the loan would be used for. Why isn’t this being disclosed now? At the Ministry of Finance there is a debt strategy programme. So it is not even the JCTR strategy who are asking for it. It’s not Jubilee who helped us to get debt forgiveness…every citizen is saying can we know the conditions so that our children and grandchildren don’t go to make this country a highly indebted poor country? We should now just be fighting poverty and not fighting debt.”
Magande said the country should only be able to borrow if the country is in a position to pay back.
Magande said it made economic sense for the country to be contracting new loans when the government could finance public programmes by increasing taxation of key sectors like mining.
“So, what is the future of Zambia to be able to pay back these loans? Where are they projecting the additional revenue to come from? You don’t go to borrow unless you have the capacity to pay back. The donor community forgave us nearly US $6.7 billion and they said now that we have forgiven you, don’t expect again to come here,” said Magande.
“And they also said, in any case, when you come here and when we give you money, we are taxing our companies which are operating in your countries. Why don’t you tax them there? So that you even save at least the business class tickets for your minister of finance coming here to get the same money which he is allowing our people to get?
Everybody (IMF and World Bank) who is interested in us is saying get your money and we are saying no!
We don’t want to get our money. So, in the end, we are beginning to choose even among our international friends.”
Labels: CHINA, CORRUPTION, MAGANDE, TAXATION, WINDFALL TAX
posted by MrK @ 4:18 AM
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