Zambia Risks Economic Shutdown - Trevor Simumba
Zambia is at risk of economic shutdown, warns trade and investment expert Trevor Simumba.
Simumba has advised the government to stop being defensive regarding growing debt levels but to come clean and iron out the inconsistencies. He has also expressed concern with regards to the practice of ‘borrowing upon borrowing or borrowing to borrow’.
Simumba illustrates the challenge for Zambia in achieving development and improved services and living conditions for the majority under the current situation, stating ‘Our domestic revenue is being consumed by public service salaries estimated at 60% and debt servicing estimated at 30% leaving only ten per cent for investments. This is why Government is struggling to pay local suppliers and contractors and has built up arrears of US$1.3 billion.’
Meetings between Minister of Finance Margaret Mwanakatwe and investors were scheduled to take place in London last week as the government seeks to allay fears regarding rising debt levels. These were left to ministry officials in the end as Mwanakatwe flew to Washington to try and advance lengthy talks concerning an IMF funded programme. However, IMF annual external debt figures appear to far exceed those declared by the Ministry of Finance, even once Mwanakatwe revised the 2017 external debt figures up from US$7.9 bn to US$8.7 bn.
The talks come as Zambia’s Eurobonds have fallen to the same level as those of Congo-Brazzaville, a country officially in debt distress, and international media and financial analysts are reporting that debt levels may in reality stand closer to 100 per cent of GDP. Perhaps one reason President Lungu chose to stay at home during last weeks Commonwealth summit in London, at which the heads of states of the 53 Commonwealth member states met for talks. Lungu’s change of heart regarding participation in a peace dialogue with the opposition UPND brokered by the Commonwealth is also rumoured to have been a factor in his decision.