WHAT DID THEY DO WITH $750MILLION LOAN RECEIVED FROM WORLD BANK?
By Amb. Emmanuel Mwamba
Both local and foreign public debt has increased dramatically in two years.
In 2022, the World Bank Group (WBG) through the International Development Association (IDA) disbursed US$750 million concessional loan to Zambia in what was termed as the highest-ever financing support to the country in a single calendar year.
Even more significant, it came after Government secured a US$1.3 billion Extended Credit Facility (ECF) from the International Monetary Fund (IMF).
The first instalment of US$185.7 million from the IMF bail-out package was also disbursed in 2022. Zambia is waiting for the next disbursement of $188million recently announced after a Staff-level Agreement Review was done and is svhefuled for IMF Exdcutive Board approval.
The World Bank stated that the US$750million concessional loan went to support concessional development policy financing (DPF).
Concessional loans , or soft loans, have more generous terms than market loans. These generally include below-market interest rates, grace periods in which the loan recipient is not required to make debt payments.
So what did Government spend these two concessional loans totalling US$935.5million.
When PF received $750million loan from the Eurobond market in 2012, there was public pressure for Government to show what the money was used for.
It’s therefore imperative that Government shows and demonstrates how the $935million was spent in 2022, especially that these funds were not directed to any tangible projects.
ZAMBIA’S DEBT POSITION
On 23rd March 2023, the Minister of Finance Dr. Situmbeko Musokotwane gave a Ministerial Statement in Parliament and released the following details.
■ Central Government Foreign Debt-US$14Billion.
■ Guaranteed State-owned Enterprise loans-$1.5billion.
■ Non-Guaranteed State-Owned Enterprise-$91million.
■ $4.06billion- The debt service standstill also led to a 46.86 percent increase in Central Government arrears to External Creditors to USD 4.06 billion (being principal and interest) as at end December 2022, from USD2.16 bilion recorded at end December 2021.
He stated thst the Ministry has also continued to engage Zambia’s External Creditors in an effort to restructure.
■ Domestic Debt- the stock of Government Securities increased by 9% to K210.0 billion as at end-December 2022 from K193.0 billion at end 2021. Performance of the Government Securities market during the year was relatively unstable, with better participation observed in periods surrounding the announcements related to the IMF programme.
■ Total Public debt was equivalent to US$31.6bn excluding interest arrears, and equivalent of USD32.8bn including interest arrears.