No Hidden Loans, Zambia will not Default on its Debt – Mukuli Chikuba

Left to Right – Resident IMF Representative to Zambia Alfredo Baldini and Permanent Secretary Economic Management – Mukuli Chikuba

THE Finance Ministry in Africa’s second largest copper producer Zambia, confirmed that the Southern African nation would not default on its debt as alluded by various external agencies. Zambia has been cited for having debt stress by both the World Bank and IMF. Speaking during an interview on 09 April, Permanent Secretary for Economic Management at the Ministry of Finance Mukuli Chikuba told the nation that Zambia was up to date and would not default on its debt obligations.

“I know what the nation’s debt service is over the next 20 years because we run those numbers. Servicing debt however takes away the benefit of using funds for economic gain and that’s what we are trying to balance as a Ministry. We are able to stand and have the requisite technical expertise to get the economy back on its feet.”

Mukuli Chikuba        

The IMF have endorsed structural reforms we have undertaken such as removal of subsidies in the energy sector, widening of taxation base, public financial management bill and other planning and budget reforms. The issue with the IMF is more on the path on borrowing Zambia will take, he said.

Our strategy is to slow down on debt contraction and curtail pronouncements which have been mistaken by the public for actual debt incurred. Mr Chikuba stated that the Ministry of Finance has for a week embarked on a debt sustainability analysis which would complete by this week and that results of the exercise is what Zambia would be presenting to the IMF at the spring meetings this month. The exercise has covered revenue projections, growth rates, the external sector, current account and borrowing requirements.

Mr. Chikuba further challenged all that claim government has hidden debt to visit the Ministry of Finance website for economic reports published. “If we had hidden loans then where are we servicing them from? He asked?” All obligations contracted by the state are vetted and signed off by the Attorney General and Finance Ministry in alignment with cap 366 of the laws of Zambia. “We have accurate records of our debt, he said” Government has no legal obligation other than that prescribed by cap. 366.

Mr Chikuba clarified the negative debt distress connotation, citing that if the nation continued on a borrowing path, then debt levels would be unsustainable.  He admitted that the greatest challenge has been pronouncements which citizens and other external bodies have been totaling to proxy the nation’s debt levels.

“External endorsements is what we need from rating agencies and political commentators to instil the right confidence in the economy,” Mr Chikuba said.

The Permanent Secretary confirmed Zambia’s external debt at $USD8.7billion, domestic at Kwacha equivalent of $USD5.1billion with ZMW12.7billion in arrears with reference to the quarterly finance report provided by the ministry.

Going into 2018, Mr. Chikuba said government expects growth of above 4.1%, inflation of between 6%-8% factoring fuel and electricity price adjustments, lending rates to drastically plummet after the Ministry of Finance pays down on arrears and increase in investment flows. Zambia is the middle   of a USD1.3billion bailout package negotiation with the IMF.

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