Government plans to refinance the existing Eurobond debt by issuing another bond. Ministry of Finance recently announced that GRZ “needs to issue another bond to pay off the debt and we will look for creditors that will lend on a low rate". Zambia has two sovereign bonds of US$750 million and US$1billion which are due to mature in 2022 and 2024, when the principal needs to be paid back on top of current interest repayments. (Source: The Post)
In the mean time, GRZ has borrowed U$104 for the Kafubu Water and Sewerage Company (KWSC) to help improve water supply in its areas of operation on the Copperbelt. KWSC says " the loan obtained is in line with the firm’s objective of improving services to all consumers through various projects". The money includes some unspecified proportion of grant. (Source : Daily Mail)
Water is clearly a favorite at the moment. The ADB also recently gave Zambia $16m loan to implement phase 2 of the National Rural Water Supply and Sanitation Project in Western Province. The project will fund water and sanitation in 16 districts. (Source : ZNBC). It is certainly an important area but one cannot help but recognise that the reason we are having to borrow is that we have failed to run provincial water utility companies. Many of them are riddled with severe debt and corruption.
The World Bank has joined in lending Zambia more money. It recently partnered with ADB to give Zambia $114m loan to finance the rehabilitation of Kariba Dam being undertaken by Zambia and Zimbabwe. GRZ says the project is critical to the region hence should urgently be undertaken to avoid potential emergency situations. Zambia has given the money to Zambezi River Authority who are running the dam with hope that it pay back.(Source : ZNBC)
World Bank has also given Zambia a separate US$67 million loan to improve the country’s universal health services under the Zambia Health Services Improvement Project in five provinces. Ministry of Finance says the financing agreement will strengthen referral linkages and advance progress towards maternal and child health millennium development goals, among other benefits.(Source: Zambia)
One can understand that Zambia is addicted to debt. What one fails to understand is why the World Bank and other international organisations keep lending money to a country that has refused to implement a debt national management strategy. It is completely indefensible for these organisations to give money to governments that refuse to be held accountable by its citizens through a proper and coherent legislative framework.
The World Bank should be lending money to countries which have a publicly accepted Debt Management Legal Framework in place. We are led to believe that the World Bank is a supporter of good governance. Lending money, even for good causes, without a proper legal framework for the people to hold Government to account is quite foolish to say the least. The hypocrisy of these multilateral institutions never cease to amaze.
Copyright © Zambian Economist 2014