CELEBRATING DEBT RESTRUCTURING, A CAUTION TO ZAMBIAN’S- UKA

CELEBRATING DEBT RESTRUCTURING, A CAUTION TO ZAMBIAN’S- UKA
28 March 2024

Hakainde Hichilema’s government’s debt restructuring celebrations are premature, a sign of political desperation meant to show intangible results while misleading the Zambian people.

As United Kwacha Alliance (UKA), we would like to expressly caution Zambians against premature celebrations following Zambia’s debt restructuring deal secured by the UPND government with international bond holders and the Official Creditors Committee (OCC) this week.

UKA sees such staged jubilations as misleading to the Zambian people by faking economic achievements and exhibiting political desperation to show good results while hiding their bad governance.

The following are the facts and reasons for our observations and position:

1. The Government should state clearly that the “Debt Restructuring Deal” does not remove the burden of the Euro-bonds, except that they have been merely consolidated into two new ones – Bond A and Bond B in order to resume debt servicing.

2. President Hakainde Hichilema and the UPND government have deliberately chosen not to reveal to Zambians that the “Debt Restructuring Deal” is not “debt cancellation” nor does it mean “debt reduction” in the official Euro-bond debt. The government is deliberately being economic with the truth.

3. The Government is not fully disclosing its financial predicaments and weaker status for this process, as the terms of the “Debt Restructuring Deal” will negatively impact the Zambian economy and worsen the cost of living for the majority citizens.

Since Zambia will now resume debt repayments of over $180m in June, 2024 on Euro-bonds alone, the UPND government is not disclosing that Zambians must expect and prepare for severe fiscal stress on our economy.

4. Zambians must Remember that, during the last four (4) years, the country has not been servicing any external debt and unfortunately, this UPND government did not create any ‘sinking fund’ to set aside financial savings and secured resources to prepare us for this debt repayment.

5. Now that after this deal we are expected to start paying, where will we get the money given our current very weak and in-crisis financial condition? This government is not disclosing and answering this question.

6. UPND government has serious financial management difficulties and fiscal lacunas to the extent that this deal will count to nothing if any. Please bear in mind that the latest FIC report reveals that more than U$2.8 billion of illicit money was externalized by foreigners to offshore accounts in the last quarter of 2023 alone– this points to an extremely weak and porous financial system.

7. The past two and half years, this government has received more than U$1 billion worth of grants – not loans, plus more than U$6 billion dollars new loans of which they have not and cannot show or explain the impact of. The famous IMF loan is half way paid and spent but most Zambians cannot see anything tangible to validate the impact of the loan.

Given the aforesaid, The United Kwacha Alliance, UKA firmly believes that the UPND’s government debt restructuring celebrations are premature and a sign of political desperation to show intangible results and mislead the Zambian people.

UKA in government, we will start growing the capacity of our people, equipping state institutions and ensuring that a localized and home driven economic development and modernization process is launched.

If Zambia is to survive and rise above external dependence in form of foreign aid and loans, the Alliance is of the view that our economy must become more export than import oriented, and this we will do.

Further, UKA we will ensure that Zambians become the most important and competitive economic players in this economy by introducing programs that deliberately favour Zambians whilst not disadvantaging foreign investment.

Saboi Imboela
Chairperson- Media
United Kwacha Alliance
(UKA)