By Patson Chilemba
Former Finance minister Ng’andu Magande has asked the UPND administration to be transparent over the conditionalities attached to the &1.4 billion IMF facility so that the Zambian should people know what has been agreed to obtain the facility
Magande told Daily Revelation that the minds of the Zambian people need to be prepared over whatever their government has consented to on their behalf.
“Yah! I would advise them to do that. But also because when we went in (Under late president Levy Mwanawasa) and we were there there was an agreement that all agreements between the three multilateral institutions, African Development Bank, IMF and World Bank are going to be posted immediately they are agreed to. So perhaps they are using that to say, after all according to the standing regulations we will publish what we have agreed,” Magande said. “But sometimes one has to say if you are going to end up with a difficult condition which perhaps the ordinary people don’t know, you might as well tell them so that they start getting ready.”
He said during his time serving under Presiden Mwanawasa, they disclosed the conditionalities to the Zambian people including introducing rural hardship allowances for teachers in some provinces who were running away from schools because of poor conditions and therefore the children were not being taught properly.
Magande said it was a good thing that the law has now been passed which will allow parliamentary oversight before any loan contraction.
“So if indeed the IMF has agreed now to give us this &1.4 billion let us celebrate. But what we should do then to tell the government can you please tell us where you are going to put this money so that in 10 years time when we start repaying it we have the capacity to repay the money,” Magande said. “Not unlike now the PF who went to borrow this $700 million bond or $3 billion bond and they didn’t even have projects. Because just saying we are going to give money to Zambia Railways, what income does Zambia Railways make if most of the traffic is going by road? Unless at that point they said we are going to renovate the railway line, introduce an express train so that most of the people going by bus will go by railway line. But then they did nothing about it. So by the time now this money is due next month we haven’t got any money to pay.”
Magande explained that the IMF facility was not synonymous to a loan but a facility, saying the World Bank and IMF normally don’t give loans but facilities to countries that are not considered developed countries.
He said that the facility was in form of concessional funding, with conditions that the money would be drawn over time for specific projects which are agreed with the international lenders supervised by the lenders themselves for the purpose that has been agreed to, with a grace period of 10 years in which not to pay anything except a 0.05 percent fee which is called an account fee.
Magande said in addition to the 10 year grace period, another 40 years was provided in which to pay out the facility.
“So that’s why it’s not really a loan but a facility. A facility means the bank or the IMF will be checking on what have you done with the money? A loan, if you went to your bank, normally a loan is they give you and you are lucky if they come to check on you because they don’t care whether you pay or not,” Magande said. “Now that is the problem we went into because when we qualified now to be middle income then you actually get removed from getting these easy and concessional facilities. So that is how PF decided well because now we are regarded as rich people we can go in the street and say we want to borrow money. And that’s how we ended up borrowing the Eurobond, which is a loan…so if we are getting this $1.4 billion it is money that we might agree to draw it out in three years, you don’t take it and put it in an account. No! You draw it as your project you agreed is progressing. So most times you draw it over three years.”
Magande said the facility can be withdrawn any time the conditionalities upon which it was signed are not fulfilled.
