Centre for Trade Policy and Development (CTPD) Cautions on Debt
The Centre for Trade Policy and Development is the latest domestic body to issue a warning regarding the likelihood of Zambia defaulting on debt repayments.
The body has pointed to the fact that there is no significant repayment mechanism in place, as well as the low levels of tax compliance among the general populations as a result of the high taxation levels.
Speaking on the matter CTPD Acting Executive Director Issac Mwaipopo is quoted as saying: “We have a number of countries that we have borrowed from. Some of them are actually from commercial markets, if you look at debts like the Eurobonds, and they have actually stipulated periods of time in which we are supposed to pay back. Most of them are maturing in the next three to four years and we are expected to pay back in full. This is besides the annual payment that we are paying against the principal loans that we got as a country. And when you look at Zambia’s ability to pay back these loans, currently, there is no much confidence to pay back the loans once they mature. So, our background to this position is the fact that there are no clear mechanisms that are being put in place in preparedness to pay back these loans that we are supposed to pay when they mature. We take note of the fact that there is a conversation around; there is need to set up what they call a Sinking Fund. And the idea behind a Sinking Fund was that it was to help to prepare for that time when loans are due.”
Mwaipopo also joined others in calling for more transparency when it comes to the full debt burden facing the country, pointing to loans secured from China as an area in which the details are obscured: “We are aware that there are some loans that have been gotten from countries like China. But in terms of putting the actual figures, people are at a loss. If it’s the civil society, it’s worse. We clearly do not have the figures or a full understanding in terms of how much we owe the Chinese government through the various loans we have acquired. So, it would also be good that the Ministry of Finance considers giving updates in terms of how much Zambia owes the [People’s] Republic of China. We might get to that point where we have a challenge to pay back the loans that we have gotten.”