Tag: debt restructuring

    Zambia’s debt restructuring deal.

    Zambia’s debt restructuring deal. Featured

    June 23, 2023 by Socialist Party Zambia in

    It is very good that finally we have a debt restructuring deal.

    With a debt restructuring deal in hand, now we will see things for what they are – the real economy – without hiding behind delayed debt restructuring.

    But the excitement coming with this announcement may be misplaced. It’s been celebrated like Zambia is receiving $6 billion.

    The details of the restructuring may not offer us paradise. And we shouldn’t confuse debt restructuring with debt write off.

    If you’re drowning in a sea of debt, you need debt restructuring to get your head back above water. Under debt restructuring, creditors change the terms of your loan agreements so that you can better manage the payments. This may include a longer loan term, a lower interest rate or even a reduction in the amount owed.

    In a word, debt restructuring is the process of reworking an existing debt agreement to better fit your current financial situation.

    From the way we are reading it, the creditors have agreed to restructure Zambia’s debt and now the creditors and the country have to agree on the details after which agreements will be signed.

    In summary, from the Ministry of Finance press release what we are picking up is the 3 year’s moratorium on principal repayment and extension of debt repayment tenure to over 20 years. There’s no mention of reduction in interest rate nor partial write off or haircut. The $6.8 billion private debt negotiations are yet to be concluded and this is the difficult part.

    At this point the agreement is non binding so we maybe celebrating too soon but we hope for favourable terms.

    Fred M’membe
    President of the Socialist Party 

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    Debt

    Debt Featured

    May 5, 2023 by Socialist Party Zambia in

    We think it’s mischievous to say all benchmarks have been met when the IMF statement clearly sets out conditions to progress with the disbursement of US$188 million subject to financing assurances from debt restructuring.

    How can they say all benchmarks have been met when there are outstanding conditions set out in the IMF statement? How can one be confident of the outcome when there are preconditions that have still not been met?

    While we support the speedy conclusion of debt restructuring, we are not confident because the Minister of Finance has made numerous statements and given timelines in which they were expected to conclude the issue – timelines that have come and gone. How can one be confident when they keep changing timelines?

    Secondly, the issue of debt restructuring being a panacea for our economic challenges is being amplified.

    Over the past two years we have not been servicing our debt, so where have the savings gone? Once debt restructuring is concluded we will have to start paying the currently suspended debt, meaning we will have less money than we have had in the past two years. Will this solve our economic challenges? The answer is a categorical NO.

    The real solution lies in formulating an internal system; an economic recovery plan focusing on industrialisation, expanding our existing manufacturing capacities – and introducing new ones – sound agriculture policy, reviewing tax waivers provided to the mining and other sectors, and energy sector reforms, among other things.

    What is needed is to adopt a non-favourite child policy; to treat all creditors the same and engage with each credit category on a bilateral basis, in addition to the G20 Common Framework.

    Fred M’membePresident of Socialist Party Zambia

    How credible are statements from govt?

    How credible are statements from govt? Featured

    April 6, 2023 by Socialist Party Zambia in

    Not too long ago, great concerns were being expressed by many citizens about the continuous depreciation of the Kwacha which was impacting the high cost of living.

    The Minister of Finance, Dr Situmbeko Musokotwane, explained that this was largely due the delayed debt restructuring programme.

    We are delighted that the Kwacha has significantly appreciated in the last two days and we pray that this trend helps to lower the high cost of living. We also hope that it will have a consequential effect of maintaining inflation within the target range of 6-8 per cent. As SP, we are delighted because such positive developments will cushion the citizens from the high costs of living and improve their livelihoods.

    However, in order to give confidence to the citizens on the sustainability of this positive move, can government clearly state what measures it has put in place for this positive change? We are aware that the debt restructuring programme has not been concluded, so what has changed and is this change sustainable?

    You will recall that I did point out that the exchange rate was being impacted by multiple factors, but government insisted that the depreciation was largely driven by stalled debt restructuring talks. How credible are statements being issued by government? And based on this example can we as citizens believe what government is telling the nation?

    Credibility is critical for citizens to buy into government pronouncements, failure to which the citizenry loses faith in government. Can the Minister of Finance explain circumstances leading to this new development seeing as debt restructuring is still stalled so as to enable citizens to better plan going forward.

    Our take is that in addition to first quarter tax receipts, they have released huge amounts from international reserves under panic.

    Fred M’membe
    President of the Socialist Party

    Socialist Party Press Statement on the engagement of Highgate Advisory Ltd as the GRZ communication advisor for the debt management process

    Socialist Party Press Statement on the engagement of Highgate Advisory Ltd as the GRZ communication advisor for the debt management process Featured

    January 18, 2021 by Socialist Party Zambia in

    The hiring of Highgate Advisory Ltd by GRZ to advise on debt restructuring related communication with all creditors and stakeholders is shameful, a waste of the taxpayers money and is symptomatic of our clueless PF government.

    The Socialist Party had in May 2020 criticized the unnecessary USD 5 million hire of the French Company, Lazard Freres. This company was contracted to provide advisory services regarding liability management for Zambia’s debt portfolio. Our Party had consistently given GRZ free advice on debt restructuring. We warned of the immense hardships the masses of our people were going to face as well as the damage to the international reputation of our country if no urgent action was taken. In the typical arrogance and parasitic behavior of the PF government, this advice fell on deaf ears.

    The Socialist Party views the hiring of foreign companies for debt restructuring services as corrupt, wasteful and retrogressive. Senior Officers in the Ministry of Finance and the Bank of Zambia have over the past 10 years provided valuable options on how debt sustainability could be achieved. Several workshops have been held, study tours conducted, econometric models developed and a policy framework suggested. However all these efforts were thrown away and rubbished because the PF leadership did not want a systematic structure and process for debt management. Transparency and accountability was never a top priority. This is a government that thrives on chaos and disorganization. They deliberately created conditions under which debt contraction could allow high-level corruption.

    Today, GBP 333,403.54 from the taxpayer is going to be spent senselessly on Highgate Advisory Ltd! This company is by all standards a briefcase one and whose owner has a questionable background. The picture emerging is that we have a cartel of former French graduates, who went through the corrupt, elitist Grande Ecole university system, worked in the finance and prime ministers offices, then went on to work for a number of dubious state actors that found themselves in a debt trap, such as in Greece and Ukraine. In vulture like style, this cartel has found out that corrupt, clueless governments whose economies are dying under a debt burden are the easiest victims. Such governments are ready to dish out millions of dollars to any “healer” who promises success without them being accountable to the citizens.

    The Socialist Party calls upon all people with a heart for this country to strongly condemn this open theft and wasteful use of public resources.

    Issued by:
    Dr. Cosmas Musumali
    General Secretary/Socialist Party
    Industrial Area office/Lusaka