BoZ receives K196.5m in State Funeral Account
By Joan Chirwa
Saturday August 30, 2008 [04:01]
THE Bank of Zambia (BoZ) has so far received a donation of K196.5 million in the State Funeral Account created to mitigate expenses incurred during President Levy Mwanawasa's funeral.
The Central Bank opened the State Funeral Account last week for well-wishers to donate whatever amount of money to assist during President Mwanawasa's funeral.
BoZ head of public relations Kanguya Mayondi stated in a press release yesterday that the Central Bank had since channeled the collected money to Cabinet Office for its intended purpose.
So far, BoZ has made a donation of K50 million while Indo Zambia Bank and Zambia National Commercial Bank (ZNCB) donated K45 million and K30 million respectively. Others are Stanbic Bank which donated K25 million, Bayport Financial Services and Standard Chartered both contributed K20 million each, well-wishers at Stanbic Bank and Indo Zambia Bank donated K5 million and K1.5 million respectively.
"The Bank of Zambia wishes to further announce that the account remains open until September 2, 2008 and that all funds collected through this account shall be promptly passed on to government," stated Mayondi.
Labels: BOZ, DEBT, INFLATION
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Zambia contracts $79m IMF loan
By Times Reporter
The International Monetary Fund (IMF) has agreed to release a $79.2 million loan to Zambia over the next three years in support of the country’s economic policies aimed at reducing poverty and sustaining economic growth.
IMF deputy managing director, Takatoshi Kato said in a statement released in Lusaka yesterday that the approval of the new Poverty Reduction and Growth Facility (PRGF) follows Zambia’s impressive record after the last facility in ended last September.
“The authorities remain committed to maintaining macroeconomic policies and pursuing structural reforms to sustain high economic growth, further reduce poverty, diversify the economy, and preserve macroeconomic stability and debt sustainability.
“The decision enables Zambia to request the first disbursement in the amount of about $11.3 million,” Mr Kato said.
The PRGF was the IMF’s concessional facility for low-income countries. PRGF loans had an annual interest of 0.5 percent and were repayable over 10 years with a five-and-half year grace period on the principle payments.
Mr Kato urged Zambia to strengthen its debt management to ensure that new borrowing did not push the country back into deep debt, after its debt was written off.
“The programme envisages a cautious policy on foreign borrowing, emphasizing concessional loans and close monitoring of external borrowing by public enterprises.
“To preserve the recent gains in external debt sustainability, the authorities will give priority to developing and implementing a comprehensive debt strategy,” Mr Kato said.
He said the new tax regime for the mining sector would provide substantial resources for infrastructure development and social spending but cautioned Zambia not to scare away the mining investors.
“In implementing the new regime, the authorities are encouraged that the attractiveness of investment in the mining sector is preserved,” Mr Kato said.
Mr Kato also asked the Zambian government to address supply shortages and inefficiencies in the energy sector.
He said prudent monetary policy helped Zambia keep inflation low and urged the country to maintain the flexible exchange rate system to enhance the effectiveness of monetary policy and enable the economy adjust to shocks.
Under the last PRGF, the IMF in June last year agreed to give Zambia a loan amounting $33.4 million after approving the last two performance reviews of a $320 million financing deal with the southern African country.
Labels: DEBT, IMF
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Falling into the debt trap
By Editor
Monday May 19, 2008 [04:00]
The debt write-offs we have so far received do not guarantee us anything. They instead offer us the opportunity to succeed as well as the risk of failure. These debt write-offs are then a promise and a challenge. They are a promise in the sense that if we manage our affairs well or prudently, we stand a better chance of making economic progress as a nation.
They are a challenge because the realisation of the benefits of these debt write-offs rests upon our shoulders as citizens of this country and on no one else. If we don’t manage our affairs prudently, we will be back into heavy debt in no time.
We shouldn’t forget that our debt that has been written off was not acquired overnight and by stupid people. It was acquired by well-meaning people trying to react to the challenges and expediencies of the moment.
They had opportunities to contract debt and they did so. With these debt write-offs, the debt capacity of our country has increased. There are today many institutions that are offering us opportunities to borrow and borrow and borrow.
It is good that we have a Minister of Finance, Ng’andu Magande, who appears to be more prudent when it comes to borrowing. We are being offered money to borrow to finance consumption even by institutions that were previously very critical of our indebtedness.
But today these same institutions are pushing or encouraging us to borrow for all sorts of stupid things or projects. It is understandable that they are in the business of lending money. If they don’t lend money, they will be out of business.
But it is our duty to know when to borrow and for what to borrow money. If we don’t, we will in no time be back to square one. We say this because if we borrow money for things or projects that do not grow the economy in one way or another, our capacity to repay will be very low and in no time we will start to accumulate heavy debts.
This is totally not desirable and should be avoided at all times. Prudence and transparency should be encouraged to the maximum when it comes to borrowing. Let us not forget where we are coming from and how we had gotten there.
The deformation of the economic structures that foreign domination has imposed throughout history on our poor countries has meant that our people have been faced with the impossibility of generating, on their own, the financial resources that are indispensable for overcoming backwardness.
For some years now, it has been evident to the international community that the only way to overcome underdevelopment is by obtaining foreign financial resources under fair conditions. That has not, however, been the main motivation for the flow of financial resources to our poor countries in recent years.
The sharp worsening of our countries’ international economic relations while an appreciable volume of surplus capital was available in the developed world created the conditions for turning flows of financing into a generator of even greater indebtedness, dependence and domination for our poor countries.
An objective analysis shows that this foreign financing – which has often been termed “for development” simply because it is directed to our poor countries – has not contributed at all to overcoming the aftermath of colonialism and neo-colonialism.
In fact, the uncontrollable growth of our countries’ external debts is not a reflection of logical consequences of a development process which necessarily involves foreign financing imbalances. It is rooted in the growing deterioration of economic relations between the most advanced countries and the peoples of our poor countries.
The developed countries’ control over world trade, the reduced diversity of our poor countries’ exports and our great dependence on imports have kept our countries from increasing their export income and forced us to accept unfavourable terms of trade.
It should be pointed out that the drain in the form of servicing operations continues to contribute greatly to the unrestricted, uncontrolled activities of the transnational corporations, through remittances of profits from our poor countries where they are located to their parent companies in other parts of the world. In other words, far much larger amounts of money left our countries in profits for every dollar invested, thus strengthening the balance of payments of the developed countries.
Foreign investments have therefore been an important factor of deterioration in our poor world’s balance of payment and an element contributing to its external debt.
Just as financial resources transferred to our poor countries have served only to compensate in the short-term for the disequilibriums in our balance of payments and have not had any real weight in the process of development, a growing process of indebtedness has been generated in our countries.
The burden of this indebtedness is such that it is crushing not only all possibilities for economic growth but also the possibilities for guaranteeing the low levels of consumption that are characteristic of most of our underdeveloped countries which are very dependent on imports.
The very dynamics of the process of indebtedness, however, while making it possible to cushion the effects of the crisis on the economies of our countries to some extent, has itself become a source of enrichment for transnational finance capital. This is clearly expressed in the evolution of debt servicing.
Given these realities, we have no alternative but to ensure that when we borrow, we only do so for projects that will enable us to pay back the money. It is not, in principle, wrong to borrow. What is wrong is to borrow for expenditure that will not enable us to grow our economy and, at the end of the day, to meet our debt obligations.
If we don’t stick to this, it will not be long before we start seeking another series of debt write-offs. In short, we will never be able to get out of the debt trap if we are not prudent in our financial dealings. The institutions lending us money are not benevolent organisations out to simply help us.
They are institutions out to make money out of us. And for every dollar they lend us, they will take out far more than they have advanced us. This is what motivates them to lend us money. Let’s be aware of this at all times and avoid unjustified debts. But to avoid this, there is need for us to quickly implement a debt management strategy, policy and legal framework that will enable us to deal with our debts in a more efficient, effective and orderly manner.
Labels: DEBT
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JCTR urges govt to implement debt management strategy
By Joan Chirwa
Monday May 19, 2008 [04:00]
FAILURE to implement a debt management strategy and the lack of a policy continue to be major weaknesses for Zambia's debt position, the Jesuit Centre for Theological Reflection (JCTR) has stated. JCTR Debt, Aid and Trade programme coordinator Muyatwa Sitali stated that the lack of a debt management
policy and failure to implement a strategy were recipes for another debt trap as lending institutions continue to offer credits to Zambia following the country's improved credit rating after having reached the Highly Indebted Poor Countries (HIPC) completion point.
"In Zambia, the delay to reform the debt legal framework, failure to implement a debt management strategy and the lack of a debt policy continue to be a major structural weaknesses which can be taken advantage of to reverse the gains of debt cancellation," Sitali stated.
He further urged the Zambian government to implement debt management policies and strategies and ultimately put in place a debt management legal framework which would provide parliamentary oversight, induce regular debt management strategic plans and a transparent and broadened debt contraction process.
During the 2008 budget presentation, finance and national planning minister Ng'andu Magande indicated that the government would intensify efforts to consolidate the legal framework governing the contraction and management of debt.
"Some creditors have delivered their part of debt relief amounting to well over US$5 billion while some creditors such as Brazil and Russia have not yet done so. This is one of the weaknesses of the creditor institutions who did not abide by the requirements of the HIPC process through cancellation of all the debt. At the international level, our call to these countries which have been ‘free riding’ is that they should ‘finish the work’ by delivering their part of debt cancellation," he stated. "
This needs immediate follow-up with a clear map of action in order for Zambia to effectively put in place mechanisms that can provide Zambians with a better way of managing public debt. We, therefore urge the government to ‘finish the work’ by quickly producing a roadmap for this process and making sure the legal framework is completed and implemented by 2008.
"We continue to point government to the JCTR proposed Debt Management Bill which provides for Parliamentary oversight and creates space for broader transparency and accountability to the Zambian people in the contraction and management of public debt."
According to the Central Bank's recent data, Zambia's total external debt now stands at around US $1.1 billion (approximately K3.7 trillion), taking an upward trend a few years after most of the country's debt was cancelled by the lenders.
Labels: DEBT, GOVERNANCE, JCTR
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Zimbabwe denies having liquidated its debt with AfDB
By Kingsley kaswende in Harare
Friday May 16, 2008 [04:00]
ZIMBABWE has denied having liquidated its debt with the African Development Bank (AfDB) as claimed by the bank. A press statement pasted on the AfDB website indicated that Zimbabwe last month repaid US $700,000 it owes the bank despite its internal problems.
"In a bid to actively reconnect with international donors, the Zimbabwean government last month paid part of its arrears to the African Development Bank (AfDB) Group," the statement reads. "On April 14, 2008, the country paid US$ 500,000 to the African Development Bank and US$200,000 to the African Development Fund.
Zimbabwe has, in all, paid US$ 700,000 to the Bank Group despite numerous economic challenges currently facing the country, both globally and locally. According to Mr. Abdirrahmene Beileh, AfDB acting director in charge of southern African countries, 'Zimbabwe is still owing the Bank large amounts of money in arrears'."
But Reserve Bank of Zimbabwe (RBZ) governor Dr Gideon Gono denied having repaid AfDB, saying Zimbabwe still owed the bank.
“...As the country's central bank and custodian of government's foreign exchange receipts and payments, we wish to categorically state that to our knowledge, there has not been any such payment,” Gono stated yesterday.
He said Zimbabwe only made such a "surprise payment" to the IMF in the 2004/2005 financial year.
"If the country had such resources, the Reserve Bank would have prioritised the importation of grain (maize and wheat); the importation of fuel, electricity, medical drugs, industrial chemicals, fertilisers, seeds, water treatment chemicals, agricultural equipment, and other infrastructural development essentials, and of course leaving some for debt service," stated Gono.
Labels: ADB, DEBT, GIDEON GONO, ZIMBABWE
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RBZ sets the record straight on AfDB debt
Herald Reporter
THE Reserve Bank of Zimbabwe yesterday refuted claims that Zimbabwe had paid US$700 million debt to the African Development Bank. In a statement, which was widely quoted by the international media, AfDB had claimed that Zimbabwe had cleared US$700 million of its AfDB debt but the bank later reduced the figure to US$650 000.
However, RBZ said the Government had continued to raise foreign currency to support the economy but such efforts were still to result in multilateral and bilateral creditors taking over Zimbabwe’s debts.
"Although, as a central bank, we are closely working with the Ministry of Finance with several rods in the fire to raise foreign exchange resources to support the economy, such efforts have not as yet resulted in multilateral or bilateral creditors and/or donors disbursing funds or taking over our debts," RBZ Governor Dr Gideon Gono said in a statement.
On Monday afternoon, AfDB posted a statement on its website saying Zimbabwe had paid US$700 million of its debt to the bank and most news agencies wrote stories from the statement.
The Herald also picked the statement in which AfDB hailed Zimbabwe for being committed to meeting its international financial obligations despite the current economic problems caused by the illegal sanctions imposed by the West.
However, AfDB corrected the figures on the earlier statement late on Monday night.
In the correcting statement also posted on its website, the AfDB said Zimbabwe had last month paid US$500 000 to the bank and US$150 000 to the bank’s subsidiary lender, African Development Fund.
"Zimbabwe has, in all, paid 650 000 (US) dollars to the Bank Group despite numerous economic challenges currently facing the country, both globally and locally," the statement said.
Dr Gono said if Zimbabwe had such resources (US$700 million), the central bank would have prioritised the importation of grain (maize and wheat); fuel, electricity, medical drugs, industrial chemicals, fertilizers, seeds, water treatment chemicals, agricultural equipment, and other infrastructural development essentials and leaving some for debt service.
Labels: ADB, DEBT, GIDEON GONO, RBZ
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FRA completes paying farmers
By Jack Zimba
Sunday May 11, 2008 [04:00]
AGRICULTURE minister Sara Sayifwanda has said the Food Reserve Agency (FRA) has completed paying all the farmers it owed money from theprevious marketing season.
She said the only pending payments were awaiting verification by police. Sayifwanda assured farmers that her ministry had put everything in place to ensure a smooth and efficient distribution of farming inputs to the farmers.
Last year the ministry experienced a hitch in its Fertiliser Support Programme (FSP) when it failed to secure more funding to buy inputs for the programme.
However, Sayifwanda said that was an administrative problem and that it had now been rectified and assured the farmers that things would go well this season.
“Everything is going on well for this season and I think the programme will be well managed. There is no problem so far,” she said.
In his submission to the Parliamentary Committee on Economic Affairs and Labour recently, secretary to the treasury Evans Chibiliti admitted that there had been a problem in funding the FSP because the Ministry of Agriculture had requested for additional funding late.
And Zambia National Farmers Union president Guy Robinson said the union was having discussions with the Ministry of Agriculture over the reduction in the allocation towards the FSP in this year’s budget.
“We feel that the reduction is not in the best interest of the farmers and it is worrying us,” he said.
The government allocated K185.0 billion for the FSP in this year’s budget.
Robinson also said the union had last week contacted all its members in 49 districts to get an update on the payments by the FRA to the farmers.
Labels: DEBT, FARMERS, FRA
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Zambia needs sustainable borrowing patterns - Fundanga
By Jack Zimba and Joan Chirwa
Thursday May 08, 2008 [04:00]
GOVERNMENT is currently developing a debt strategy to control the country’s borrowing patterns, Bank of Zambia (BoZ) governor Caleb Fundanga has said. Appearing before the parliamentary committee on economic affairs and labour on Tuesday, Dr Fundanga said Zambia needed strategies to ensure responsible and sustainable borrowing patterns are adopted by the government. He said the move was not meant to prevent government from borrowing but to ensure that resources were borrowed for specific economic programmes.
“The debt strategy which is currently in draft form will provide a clear framework for governing debt contraction and management,” Dr Fundanga said.
He said government’s total external debt, which now stood at US $1.1 billion, was still a challenge for the country.
“Borrowing should be for productive activities so that we can have the ability to pay back,” Dr Fundanga said. “Domestic debt is also a matter which needs to be addressed as it carries some interest, so government has to mobilise this money to pay back. Borrowing sometimes is not good for the future of the country and that is why we needed guidelines for borrowing by the government.”
Dr Fundanga also called for investment in the power sector, saying, “there is no nation that can hope to develop without investing in power.”
He said even government programmes such as the Irrigation Support Programme could not succeed without a sustainable power sector.
He further cautioned against subsidised credit in the country’s pursuit to develop.
“Subsidised credit must not be encouraged because we need viable financial institutions,” Dr Fundanga said. “For example, we had Lima Bank and the Co-operative Bank which used to give credit to farmers at subsidised rate. These institutions operated so much on subsidies and in the end when government became broke, these institutions could not operate.
This is why these institutions need to operate as serious business entities in order to survive in an event that government runs out of money.”
Labels: BOZ, CALEB FUNDANGA, DEBT
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Lubinda calls for involvement of stakeholders in debt management
By Joan Chirwa
Friday October 19, 2007 [04:00]
PARLIAMENTARIANS in developing countries should search for innovative ways of making debt work for the poor, Kabwata member of parliament Given Lubinda has said. Presenting a paper on Zambia’s challenge on debt management during the Jubilee prayer breakfast in Washington on Tuesday, Lubinda said Zambia, like many other developing countries, was still grappling with high levels of poverty despite the amounts of debt contracted in the previous years, hence the need for the involvement of all stakeholders in debt management.
“The bitter experiences of one billion people in the world living under one US dollar per day, where every three seconds a child dies from extreme poverty, and where 12 million children have been orphaned by HIV/AIDS in Africa, must give us parliamentarians the impetus to search for innovative ways of making debt work for the poor,” Lubinda said.
“We must be compelled to eradicate those conditions that make debt hurt the ones it is meant to serve. Zambia can well demonstrate that debt relief can reach the poor.”
Members of the United States Congress have sponsored a Jubilee Act that calls for responsible lending and expanded debt cancellation in order to assist poor countries in the management of debt acquired from developed nations.
“For the noble intentions of the Jubilee Act to have meaningful effect, the other side of the equation ought to be put right and the Zambian Parliament is cognizant of the fact that our country too has to engage in responsible borrowing and responsible utilization of borrowed and own resources,” Lubinda said.
The Zambian Parliament over the last few years has been working on reforming the legal framework governing not only loan contraction processes, but also the management of the budget cycle.
Lubinda said it would be difficult for Zambia to attain the Millennium Development Goals (MDGs) if any debt acquired does not benefit the poor.
“I appeal to all parliamentarians globally to exert pressure on our governments to deliver on the United Nations MDGs,” said Lubinda.
“I appeal to the people of America to insist that the government of the United States of America takes the leading role in delivering on MDG number eight which calls for building a global partnership for development, addressing the needs of least developed countries, developing an open trading and financial system and dealing comprehensively with the debt of developing countries.”
Labels: DEBT, GIVEN LUBINDA, JUBILEE ZAMBIA
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Zambia's loan contraction process is not transparent, says Lewanika
By Bivan Saluseki
Wednesday October 17, 2007 [04:00]
Western Province Jubilee Zambia secretary Mwangelwa Mbikusita-Lewanika has said Zambia's limits and purposes of getting new loans were highly ambiguous and not open to scrutiny. Lewanika yesterday said Zambia had in the past borrowed excessively and recklessly, and did not manage the debt well.
"The level of public expenditure, in particular on developmental projects, has not been commensurate with the high levels of borrowing, especially during most part of the first 10 years of the Third Republic, as evidenced by the high levels of plunder," he said.
Currently, the legal prerogative to procure new loans lies in the hands of the Minister of Finance and National Planning and Parliament does not need to approve the entry into loan agreements.
"This anomalous situation must be stopped. To achieve prudent procurement of loans by the government of the day, the loan contraction process should be enshrined into the national constitution," he said.
Lewanika said there were problems or shortcomings in the ways and means the debt has been incurred and that was a direct result of the fact that the legal framework governing the contraction process was inadequate.
He said the current loan contraction process was not transparent and lacked accountability, noting that under the current legal framework, the loans and guarantees (authorisation) Act, Cap 366 of the Laws of Zambia, gave a blanket authority to the government to borrow.
"In view of that, there is need to put in place measures that would ensure that the resources will be spent on Zambian people, especially the poor. Such measures include the Debt Mechanism, which is a broad participatory, transparent and accountable way of disbursing toward poverty eradication any savings coming from debt relief or cancellation," he said.
He suggested that the Constitution and Act of Parliament must provide the authority to borrow while terms of reference or guidelines to negotiating loans should be in the statute itself, at least, as regulations.
He said the public should be involved in the loan contraction process.
"Parliament should have its constitutional powers to approve all loans and have them gazetted and made available for public examination before being signed," he said.
Labels: DEBT, JUBILEE ZAMBIA, LOANS, PARLIAMENT
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‘State won’t borrow beyond K20 trillion’
By KASUBA MULENGA
GOVERNMENT says it has worked out a strategy to avoid falling into unsustainable debt following the country’s attainment of the Highly Indebted Poor Countries Initiative (HIPC) completion point in 2005.
Minister of Finance and National Planning, Ng’andu Magande, said yesterday that Government would ensure that it does not borrow beyond K20 trillion as a means of remaining within sustainable levels, especially that the country was generating significant revenue locally.
Mr Magande said this in Lusaka during a Zambia National Broadcasting Corporation live television programme sponsored by the Jesuit Centre for Theological Reflection (JCTR).
The discussion was on debt management, with a special focus on Zambia after the HIPC completion point.
“I want to assure the nation that Zambia will not get back into unsustainable debts because Government is getting a lot of revenue locally. We will only have debt within reasonable levels,” Mr Magande said.
This is amid concerns that after attaining the HIPC completion point, Zambia’s debt dropped to about US$502 million in July 2006 but sharply rose to US$1.5 billion by December the same year.
But the minister said after facing a heavy debt burden for a long time, Government would be careful with the way it borrowed money, and appealed to the public to entrust Government with such a responsibility.
Mr Magande said although under Cap 366, Part 10, of the Laws of Zambia, he had the authority to source loans for the country, he would ensure that the country did not contract loans beyond the K20 trillion ceiling.
He said if Government first allowed MPs to discuss the terms of acquiring loans from external sources, it would take too long to complete the process of getting the funds.
Mr Magande said there were technocrats competent to understand the nature or conditions attached to loans.
But Kabwata MP, Given Lubinda, said it was important that Zambians knew the terms of getting external loans through their representatives in Parliament.
Mr Lubinda, who is also chairperson of the Parliamentary Committee on Economic Affairs and Labour, said the country should enact a Budget law, to allow MPs to discuss the conditions attached to any loan before Government could access it.
He said since the current legislation did not provide for MPs to sue Government over loans which could have been obtained under dubious conditions, only a law could be effective to stop the State.
Mr Lubinda said as much as loans could be sourced for development programmes, it was important for the people to understand how they were sourced.
But Mr Magande said knowing where loans came from was insignificant because the main issue was development.
And of Jubilee Zambia/JCTR’s Muyatwa Sitali said although the country attained about 65 per cent debt cancellation, the solution to debt management had not yet been established.
Mr Sitali said there should be reforms to institutions and the legal framework on debt management in Zambia, as this was the only way to attain meaningful development.
He said the issue of MPs discussing conditions attached to loans before accessing them was paramount and should be enshrined in the legal framework regarding debt management.
And giving Zambia’s debt burden background, former President, Kenneth Kaunda, said when the country got independence in 1964, there were only 100 university graduates who included three medical doctors. He said copper prices later went down while international oil prices rose.
Dr Kaunda said because of this, his Government decided to borrow funds from the International Monetary Fund and World Bank to build schools, health institutions and other social infrastructure.
He said the two international financial lending institutions gave Government strict conditions on repayment but it negotiated to be paying in small amounts so that the country could use the rest on local development.
“But when we failed to follow their conditions, they came back hard on us with tricks. The world should remember this is a very unfair way of dealing with debt,” Dr Kaunda said.
Labels: DEBT, DOMESTIC DEBT, HIPC, JUBILEE ZAMBIA, MAGANDE, MUYATWA SITALI
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Let's avoid unnecessary debts
By Editor
Saturday October 13, 2007 [04:00]
There is a saying that those who refuse to study history are destined to repeat it. And experience has shown that when history is repeated where it could have easily been avoided, the effects are even more devastating than during the first experience. Truly, it is a great pity that Zambia, having just come out of a suffocating debt of about US$7 billion, is again back on the borrowing path, a dangerous path to tread for a country that is still battling with a hangover of an excruciating debt.
It is a pity that after reducing our external debt to US$502 million only in July 2006, the amount had dramatically risen to US$1.5 billion by December 2006.
We do understand that borrowing cannot be completely done away with, especially for major capital projects, but we also know that there should be prudence and responsibility on the part of those who borrow on behalf of the nation.
And this is why Dr Kenneth Kaunda and others have today decided to go without food in order to demonstrate to those who are in the habit of imposing debt on our heads that they have been very unkind in their motives.
We agree with KK that most of the debt that we have found ourselves in has not been given to us on favourable terms because most of the time they are aimed at enslaving us. Let us remember how we struggled as a nation to develop because we had to channel most of our earnings towards repayment of debts which were basically imposed on us by ill-motivated forces.
By this time, we should know very well the effects of debt on our countries. All over the world, we have seen how debt has crippled many developing nations.
Today, millions of people face poorer and poorer living standards primarily due to the fact that most of the resources have to be diverted towards debt repayment.
Although we may blame the governments of poor countries that borrowed carelessly, we also think that the rich nations and other multilateral groups such as the World Bank and the International Monetary Fund (IMF) share a huge amount of the blame for lending irresponsibly.
It is understandable for anyone to wonder why we should be criticising debt when a nation like ours is still poor and needs to employ numerous measures of mobilising resources for its development. We have already said that it is not possible to completely do away with debts.
What we are against is accrual of odious debts, borrowing enormously to the point of strangulating our economy and leaving the majority of the people in extreme poverty as resources are channeled to rich nations which lend, basically for poor borrowing nations to subsidise the rich.
As we have shown already, our major worry now is that debt accrual is not ending. We are still borrowing and it would appear that we have not yet learnt any lessons from borrowing carelessly.
According to informed experts, total debt continues to rise at the global level, despite ever-increasing payments while aid is dwindling. We are told that we in the developing world are spending US$13 on debt repayment for every US$1 we receive in grants.
For the poorest countries, US$550 billion has been paid in both principal and interest over the last three decades, on US$540 billion of loans, and yet there is still a US$523 billion dollar debt burden.
This is why we thought that although he probably might not have been the best person to have said it, since he represents a regional grouping whose members have also extended odious debts to poor nations, European Union head of delegation in Zambia Dr Derek Fee was spot on when he warned that it would be a scandal for Zambia to get itself back into debt.
As he correctly observed, Zambia had benefited from debt write-offs under the Highly Indebted Poor Countries (HIPC) Initiative and it would be a scandal for the country to start contracting loans again.
This advice is correct because there would be no benefit from relieving ourselves of the debt overhangs only to quickly take on other loans where we are required to pay back through our nose.
We thought this advice was timely and correct. But what did we get from finance minister Ng'andu Magande? He started addressing a non-issue, talking about the fact that Dr Fee had no right to decide which nations Zambia should partner with.
Yes, Dr Fee might have been subjective or self-interested in his reference to the fact that African countries were mortgaging their countries through the loans they were taking from China. However, the important point from Dr Fee was that, and as he put it himself: "It will be an absolute scandal if Zambia started getting itself back into the loan track of taking loans and having to pay back.
" Rather than jumping to conclusions about how Zambia should be left alone to decide where to get loans from, Magande would have helped a lot if he cared, even a little, to answer the question about Zambia's descent into new loans when it is just emerging from a very huge debt overhang. Of course Magande might have reacted that violently because he had just announced that Zambia was about to contract a loan from China totaling US$39 million for purchasing equipment for maintaining feeder roads.
Yes, Magande can easily justify this kind of debt because he knows that it is not his generation which is likely to repay it. We do not want to get back to a situation where we will be told that all these debts were accrued some thirty or forty years ago by the political leaders then.
This is what we were being told about the famous US$7 billion, that it was a result of careless borrowing as far back as the 1970s and we were still paying it back until last year when we qualified for the so-called HIPC debt write-off.
So we share the concerns of people like Dr Kaunda that the time for imposing debts on our heads is gone and our political leaders must begin to accept the fact that they can no longer borrow carelessly. There is no need to tie future generations to poverty inflicting debts. We have had enough painful lessons about some of these debts from rich nations.
The time for careless borrowing is gone and it is important that the loan contraction reforms in Zambia be expedited so that current politicians are not allowed to keep committing and tying future generations to debts which are not necessary and can be avoided.
Labels: DEBT, EDITORIAL
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KK urges Zambians to fast against debt
By Brighton Phiri and Joan Chirwa
Saturday October 13, 2007 [04:00]
DR Kenneth Kaunda yesterday said he would today join Jubilee Zambia in fasting for the country's responsible borrowing and lending patterns to demonstrate that debt was a deadly disease to humanity. "I have been invited to participate in fasting and I am glad to be part of Zambians who are fighting this deadly disease," Dr Kaunda said. "I want to demonstrate to those who have been imposing debt on our heads that they have been very unkind in their motives."
He urged Zambians to join forces in fasting so as to denounce the debt inflicted on them by unkind forces.
Dr Kaunda, who has supported Jubilee movements in the past, will fast today to call for a quick enactment of the Jubilee Act in the United States as well as to speed up the loan contraction reforms in Zambia.
The Jubilee Act would compel the US government to cancel the debts of up to 25 additional countries currently ineligible for debt cancellation, end harmful economic policy conditions as well as establish an audit of past lending and set more responsible lending practices for the future.
Jubilee USA coordinator Neil Watkins said: "Dr. Kaunda's fast is an act of solidarity, which should speak to the conscience of the governments of rich countries. Many poor countries are still paying external debt, which is as a result of both their own borrowing and in many cases, irresponsible lending decisions and policing by rich nations as well."
Watkins indicated that indebted nations currently spend an average of $100 million each day to service their debts - money they cannot spend on food, education, health services and other necessities.
"Cancellation of these debts is needed to help reach the UN Millennium Development Goal (MDGs) of cutting worldwide poverty in half by 2015," he said.
Watkins has also urged the US government and other rich countries to put in place legal measures that would promote creditor responsibility and end illegal practices of private commercial creditors - also known as "vulture funds" - which seek to benefit from purchasing the loans of poor countries.
Jubilee-Zambia coordinator Muyatwa Sitali hailed Dr Kaunda's long commitment to debt and social justice.
"As Jubilee movements, we recall how in 1987 Dr Kaunda's government cut off the IMF Structural Adjustment Programme and they chose to pay only 10 per cent of Zambia's export earnings for debt service while allocating more resources to social economic sectors that were needed to propel growth from Zambia's own resources.
This commitment exemplifies the need for prudent debt management and it resonates with the Jubilee movements calls for prudent debt management," Sitali said.
"For Zambia, the need for prudent management of debt resources is extremely important, especially now after the HIPC and MDRI debt relief initiatives.
Zambia's debt is steadily rising and Parliament's participation in loan contraction continues to be marginalised."
In July 2006, Zambia's external debt was only US$502 million but this dramatically increased to US$1.5billion by December 2006.
"The concerns being shared by Dr Kaunda form a key component of a society which should be guided by values of accountability and transparency in debt management and utilisation of debt resources," said Sitali.
And Dr Kaunda, who is also Marli Investment Zambia board chairperson, said the outgrower model of growing jatropha oil plant in Zambia under Marli Investment was the opposite of what the rich nations feared that indigenous people risked being displaced by jatropha production.
"This is not for the rich, but peasant farmers because they will be empowered economically and maintain their traditional land," he said.
Maril Investments director Kamal Desai said his company had raised US$45 million capital through Technopreneur Angel Ventures, a Singapore-based renewable energy company.
He disclosed that his company would contract over 250,000 farmers and was expected to produce over 1. 5 billion litres of Jatropha oil per annum, of which 240, 000 litres would be refined and blended for local consumption and 1. 3 billion litres would be exported.
"Jatropha oil is considered to be an international feedstock of choice for bio fuel as it does not compete with food crops, grows well in marginal land, creates large-scale employment, prevents soil erosion, can be intercropped with food crops, produces more than 30 per cent of oil content from seed and requires low maintenance," said Desai.
Labels: DEBT, JUBILEE ZAMBIA, KENNETH KAUNDA
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State ponders $600m debt cancellation
By NANCY MWAPE
Finance and National Planning Minister, Nga’ndu Magande, said efforts to obtain debt relief under the enhanced HIPC initiative from the remaining creditors had been stepped up. In April 2005, Zambia’s external debt amounting to US$3.8 billion out of a total US$7.2 billion was cancelled.
Following the qualification to the HIPC initiative completion, Government entered into negotiations with both multilateral and bilateral donors to discuss cancellation of the remaining debt.
Mr Magande said in an interview in Lusaka that his ministry was currently having discussions with remaining bilateral creditors namely Brazil, Bulgaria, Russia, India and Iraq. He said Russia had agreed that a team goes to that country for discussions while Brazil had not yet replied to Government’s request.
Mr Magande said following the opening of an embassy in Brazil, Zambia’s ambassador assigned to that country had been asked to approach Brazilian Government on outstanding debt.
The minister, however, hoped that Brazil would reply to Government’s request soon.
Commenting on the debt owned to Iraq, Mr. Magande said Government had not yet approached Iraq as it was considering using the United Nations’ system once security stabilised in that country.
He added that Government was also in discussion with India though the remaining debt was not huge.
Mr Magande said through India’s ambassador in Zambia, Government was in discussion to find out exactly how much debt had remained.
“We do owe India not more than US$30 million. The problem is that, the money we owe India belongs to so many companies, and we are trying to reconcile our information with them,” he said.
Meanwhile, Government will soon launch an aid policy and strategy aimed at strengthening the efficiency of aid.
Mr Magande said in line with the strategy, a foreign aid reporting and monitoring system would also be developed.
He added that as a first step, the ministry would create an integrated database on external aid to ensure reliability and comprehensiveness of aid financing included in the budget.
Labels: DEBT, MAGANDE
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http://www.postzambia.com/post-read_article.php?articleId=23403
Kapita to pursue politicians owing FRA
By Bivan Saluseki
Sunday March 04, 2007 [02:00]
AGRICULTURE minister Ben Kapita has said he would soon start pursuing politicians that owe the Food Reserve Agency (FRA) and the Cooperative Bank. Kapita said in Parliament that members of parliament were the majority in terms of debtors of the Cooperative Bank which government was working towards re-opening including FRA.
"They have asked me to help them collect the money. I am coming to chase you. I want the Cooperative Bank to put the house in order. I want them to chase the politicians so that they pay and pay the last ngwee," he said.
Kapita said the current government was not a talking box and it wanted to deliver its promises. "We don't want to be doing things haphazardly," said Kapita. This was after Mapatizya UPND member of parliament Ackson Sejani asked the Ministry of Agriculture when the bank would be re-opened.
And Machungwa said the current floods were unprecedented and Zambia had not yet comprehended the magnitude of problems. Machungwa said agriculture had been decimated by floods and from the Yellow Book, resources allocated for floods were not enough.
http://www.postzambia.com/post-read_article.php?articleId=23404
Pay decent wages, Hichilema urges govt
By Nomusa Michelo
Sunday March 04, 2007 [02:00]
UPND president Hakainde Hichilema has called on government pay public service workers decently to help reduce pilfering of public resources. And Hichilema said there was need to adequately fund the investigative wings of government such as the Drug Enforcement Commission (DEC) and the Anti Corruption Commission (ACC) to investigate cases of corruption.
In an interview, Hichilema said there was need to remunerate public service workers so that they did not feel the need to supplement their income through corrupt means. "This is why it is important for public service workers to be paid decently so that this corruption should not be an additional source of income," he said. "We also need to make sure the Anti-Corruption Commission is funded properly so that it doesn't have to wait for a newspaper to raise these things. These investigations should be done as an every day thing."
Hichilema said corruption was a huge cost to the economy, which should be dealt with in a holistic manner. "For instance the issue of the K36 billion. We were told that we would be given the names of the people involved but up to now we are still waiting. Who are they?" he asked. "And now it is at the Ministry of Lands, but we know that there are many other places where these things are happening. Corruption is huge cost, a cost that is paid by the people of Zambia."
Hichilema said the Ministry of Lands if handled properly could be a substantial source of revenue for the government. "People at the Ministry of Lands have been giving themselves free land and they go and sell it for huge profits, which could be going to the national treasury," said Hichilema. "Instead it is being leeched through corruption. We need this money to accrue to the national treasury."
Labels: DEBT, FRA, HAKAINDE HICHILEMA, UPND
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Donegal shouldn't accept money from Zambia - debt campaigners
By Bivan Saluseki
Monday February 19, 2007 [02:00]
DEBT campaigners have said Donegal - a 'vulture fund' should not accept any money from Zambia. Donegal International had sued the Zambian government and Ministry of Finance before the London High Court for US$55 million plus compound interest at eight per cent on a debt the company secured from Romania in 1999 for US$3.2 million. Royal Courts of Justice ordered that Zambia should pay a much-reduced sum (to be decided next month) to US Company, Donegal International, as repayment on debts incurred by Zambia from Romania in 1979. Donegal's claim was for over US$55 million, but the judge decided that although the original agreement with Zambia was legal, the award should be significantly less.
Donegal bought the debt from Romania in 1999 when Zambia was on the verge of renegotiating it.
Adrian Lovett, director of campaigns and communications at Oxfam said Zambia, a poor country, desperately needed the money for its basic health and education services. "The judge was unable to dismiss the whole claim but it is clear that while the actions of Donegal International were not strictly illegal, they were immoral. When a country is as poor as Zambia, in desperate need of money to pay for basic services like health and education, it is unconscionable to pursue an inflated claim for a debt that should have been written off years ago. Donegal should not take the money," said Lovett.
Trisha Rogers, director of Jubilee Debt Campaign, said Vulture funds' predatory practices should be put to an end. "There is a clear need for a fair, comprehensive and binding framework for dealing with poor country debt, which will ensure that commercial creditors will never again have the chance to profit in this way. Gordon Brown, as UK Chancellor and Chairman of the IMF Finance Committee, is in a strong position to make this happen. He has previously stated that he is against vulture funds: he should use his position to put a stop to their predatory practices," said Rogers in a statement. The campaigners stated that vulture fund must not take cash from Zambia. UK Chancellor, Gordon Brown, has condemned vulture funds in the past.
The campaigners said Donegal International's claim threatened to undermine Zambia's plans for poverty reduction. A London court stated that witnesses for Donegal had at times been "dishonest". Jubilee Debt Campaign and Oxfam are arguing that the phenomenon of vulture funds targeting poor countries in this way is fundamentally immoral - and that the system needs to change to prevent it.
Visiting United Nations Development Programme executive director for legal empowerment of the poor Naresh Singh said the vulture fund tactics were ruthless.
Labels: DEBT, VULTURE FUND
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