Former Finance minister Ng’andu Magande has welcomed the $6.3 billion debt restructuring the country has reached with bilateral and multilateral institutions, but that they key will now be for the UPND administration to plan on how they will secure future income for the country after reaching the mechanism.
Zambian yesterday reached a debt restructuring mechanism of $6.3 billion with bilateral and multilateral institution creditors.
Speaking with Daily Revelation, Magande said the emphasis should now be on projects that will secure income by avoiding wasteful expenditure that will draw the country into more problems.
“Well until we see exactly what the conditions are and what all the conditions are, not what the conditions are but what all the conditions are. It means then we can celebrate and encourage that they complete the whole restructuring,” Magande said about the other debt with private holders like bond holders the country got the Eurobonds from.
He said of the $6.3 billion, a significant portion of China’s debt to the country will be restructured, meaning that the balance will have to be paid later on, and urged the private holders to emulate the bilaterals and multilaterals as that will give the country more breathing space.
Multilateral institutions are the formal international institutions the country owes such as the Africa Development Bank, IMF and World Bank while bilateral agreements relate to relations between two countries, for example Zambia and China.
Magande said with the debt restructuring, it means the debt the country owes which was due for payment at specific earlier intervals will now have to be repaid at a later date and thereby giving the country room to invest the money that was due for repayments now for other ventures.
“It means if we were paying $200 million a year and then after restructuring we start paying $80 million, it means we have that difference which we can use for local projects. So it’s something but it’s not in all,” he said.
Magande suggested how the money that was meant for repayment could be utilised for income generating activities and not consumption.
“What also will be very every important is the money that we will now not be sending to these creditors, what projects are we thinking of? Not programmes because something like education, medicines those are not projects. Those are programmes. So what we need are projects,” Magande said, saying he would like to hear initiatives that certain amounts will be reserved for the importation of things like tracktars for agriculture production, as well as determining how certain amounts from the savings will bring in the much needed incomes in the future.
He said the programmes of educating people will always continue even during debt stress but the difficult ones to which the country must focus priority towards was how the income for the future will be secured now.
“If perhaps we make it cheap for importing agricultural equipment or even invest into assembling of tracktars or ploughs then people are being empowered to fight poverty,” Magande said.
He congratulated Finance minister Dr Situmbeko Musokotwane and team, saying what they have done now is like someone who cleans the books of accounts.
“It must be translated into a project of doing better in the future. So what are we going to produce? Do we have a programme of producing more maize so that the people in Matero who are working at a company there and can’t produce maize, we will make it cheaper for them to buy maize?” Magande said.
He said the major focus was to secure income for the country, saying he knows that people want education but if possible the free education could be reserved for people who excel in their academics to make it competitive.
“It means institutions that are going to handle this money like CEEC, they must have people that have an interest in bringing other people from below,” Magande said.
He said some people were arguing that debt restructuring was simply postponing the debt for future generations to repay it, but without postponing the same debt now, a lot of things will be affected including the very future of the future generations people are seeking to protect.
He said there should actually be a strong emphasis now to empower the youth so that the country does not get back to where it has been.
“The people in the Ministry of National Planning and Finance must sit down now to say let’s have a plan and for projects that are going to make sure that 20 years from now we don’t have our grandchildren going back to what has happened after HIPC was removed and then debt restructuring,” said Magande. “Because with us we had a plan. We were having a special account for money from the mines and we started getting the money in 2008 and it was substantial amount which we said this will go to special projects. And that is required at the moment.”
