By: Anthony Bwalya – UPND Member
Let’s be clear: Zambia’s bonds are junk. They are trading at close to 65% discount right now. It means investors are willing to dump them for only 35% of their original value because they do not believe they will ever get their money back.
But there are consequences to this.
Restructuring Zambia’s public debt through Capital Markets will cost close to 60% more than the initial cost of this debt. That is close to $600m more debt to restructure the existing debt
At the height of the Bill 10 debate, just when the PF was proposing to put a dagger in the back of our Republican constitution,one Garry Nkombo took the house to the task and raised a point of order tied to the court action that one Dipak Patel had commenced against the PF regime; questioning the LEGALITY of all public debt contracted after 2016.
Now, I speak confidently on the legality of all debt contracted after 2016 by the PF regime because my thoughts have always been in the public domain and there are numerous records to corroborate my stance on this.
The PF regime has been contracting public debt without the approval of Parliament, contrary to relevant sections under Articles 63, 114 and 207; the same sections they are now trying to remove using Bill 10. You can refer to my historical positions on this matter and note that I have always called it illegal borrowing.
This is problematic for the PF. Firstly, it demonstrates a lack of patience and discipline in planning for public borrowing, to the extent that they were prepared to disregard the Constitution just to get their hands on expensive capital markets, and they did.
The only motivation for the lawlessness and commission of illegality by the PF regime is corruption and the need for people to get paid commissions just to tie our country into debt. This has happened before in Mozambique and there was consequences. See the links herein:
http://amp.economist.com/middle-east-and-africa/2019/08/22/a-2bn-loan-scandal-sank-mozambiques-economy
http://www.google.com/amp/s/qz.com/africa/1519653/mozambique-finance-minister-arrested-credit-suisse-fbi-caught-up/amp/
In fact, high ranking members of the PF regime are most likely to have received hefty kickbacks, running in hundreds of millions of dollars just to commit our country to capital markets’ debt.
Zambians must weary of the appetite for corruption and illegality by the PF regime.
An IMF bailout demands discipline, the credibility of political leadership and a real commitment to sober public expenditure patterns. This is something that capital market operatives are not interested in because they make their money in commissions on the loans issued, that is all.
It is foolish for the PF regime, to turn their backs on multilateral initiatives and run into the hands of loan sharks.
A few things should happen right now:
There will have to be a process of reassessing the legality of Zambia’s public debt so that the state can void all such debt and individual members of the regime be held personally accountable for the criminality
Zambia to institute a credible, talented team of negotiators to engage multilateral partners and negotiate an alternative rescue package away from capital markets.
Zambians must commit to a change of government because a lot of this depends on it.
We are about to lose our country to political greed.