After arrogantly failing to listen to the free advice of the World Bank, the International Monetary Fund and many others, including ourselves, to rationalise its borrowings and infrastructure projects, today this government has turned to Lazard, to lizards to advise on restructuring its $11bn foreign debts that have threatened to become Africa’s first sovereign default during the coronavirus pandemic.
The investment bank was hired on a $5m contract to advise on “liability management” of the country’s debt.
Zambia is facing $1.5bn of debt payments this year, more than its official international reserves as of January. Fitch Ratings cut Zambia’s credit rating to double C in April and said that default was “probable”.
Clearly, this government is in very serious trouble. It has failed to manage its debt. It has borrowed beyond what it can manage.
They are now looking for a scapegoat in Lazard. Tomorrow they will say, ‘We were advised by most competent institution.’
But we all know the right thing to do; we all knew they could not sustain the debt this government was accumulating from the most expensive sources. We are now looking for some institution to tell us what to do – at a fee of $ 5 million – even though they know already what is required.
Going to seek advise from Lazard, from lizards is also an indication that they consider our institutions – our Ministry of Finance, our central bank, our Ministry of National Planning, our legal ministry – not competent enough to provide correct advice. It is a vote of no confidence in those managing these institutions. This is an admission that as a political party, as a government they are not competent enough to manage our country’s economy.
Are they telling us that all our institutions – universities, research institutions, professional firms – are not competent enough to help manage this debt?
But how different is Lazard’s advice going to be from what has already been given locally and internationally? Even the institutions that we already know their purpose is to serve the interests of the powerful nations that dominate them – the IMF and the World Bank – gave them advise, right or wrong, but they overlooked it.
So now that they are in deep trouble they want to look for messiah, a saviour in Lazard! This government is going to pay Lazard $ 5 million to tell them what they already know!
This is what happens when leaders stop listening to advice and only listen to their own inner demons. They used to arrogantly brag that their government will not stop borrowing! Can they say that today?
We are reminded in Proverbs 12:15, “The way of a fool is right in his own eyes, but a wise man listens to advice.”
Issued by Fred M’membe on behalf of the Politburo of the Socialist Party
Garden Compound, Lusaka