Turkish Loan Explained - Mwanakatwe vs Miti
Following a statement made by President Lungu regarding a Turkish Company that is being courted on refinancing the 2022 Eurobond, Minister of Finance Margaret Mwanakatwe has sought to reassure analysts that the Government's consideration of this option is "not in anyway a signal of failure to repay the Eurobonds".
"If the offer from Turkey crystallises, no unilateral action will be taken by the Government. We stand by the commitments made to bond purchasers’ at the time of issuance of the Eurobonds not to take any action without consulting holders of Zambia’s Bonds... We remain fully committed to meeting all our liabilities on time and in full. In line with the foregoing, we have developed a redemption strategy for the three Eurobonds" she further explained.
Meanwhile, civil society activist and commentator Laura Miti has also shared her take on what the Turkish loan will mean for Zambia, writing:
"Today, I heard a caller on Hot FM commend President Lungu for getting Turkey to refinance our Eurobond. He went so far as to say "that is why Edgar wins elections. He does not talk much but acts." Dear God that is like throwing a party at a funeral. So here is what that begging we saw the President do on TV, means. Turkey will buy the loan (Eurobond) . That means they will pay the principle and interest off. We will then owe the nameless Turkish company, which is a commercial lender, what we owed on the Eurobond. This is not a kind act by the company . It is a business transaction. They will charge us extra interest. This means that the sum we will owe to the "kind benefactor" is likely to be astronomically more than what they paid for us. The Turkish funder is what is called a Vulture funder. Vulture funders do not play games when time to pay comes.
While we get our collective heads around that situation think of this - we have no idea where the Eurobond money went. At least I don't. Zambia Railways and Zesco are still limping. In the Zambian context an example is this: a family borrows money to pay school fees. The borrowed money is gone, dad and mum can't say how they spent it, but the undisputed fact is children never went back to school. The family then looks for kaloba to pay back the person who leant them school fees. The kaloba will come at high interest and this Kalo a guy is known to be vicious when his loans are not repaid. Meanwhile Mr & Mrs still need to find money to put children in school. That, dear Zambians, is why your President was looking so wet, on TV."