President Lungu Wants To Continue Borrowing Despite Uncontrollable Debt

The widely read publication Africa Confidential has released an article stating that despite Zambia having an unclear debt pile, President Edgar Lungu’s government has no plans to stop borrowing.

The Africa Confidential Report Volume 59 No. 7 of April 6, 2018 indicated that: “Edgar Lungu’s government has no plans to stop spending, but the amount that it owes is rapidly growing beyond control.”

The report outlined that demands for clarity on Zambia’s national debt were intensifying, as the stand-off with the International Monetary Fund (IMF) continued and senior figures in the government fear “a Zimbabwe-style economic crisis and currency crash.”

“They say that contrary to official figures, the debt now stands at 100 per cent of GDP. They worry that President Edgar Lungu has no plans to halt the borrowing spree. Oblivious to the alarm bells sounded by Zambian officials and politicians, as well as international financial institutions, he may be steering the country towards a cliff edge, pundits fear,” the AC stated.

“The precise size of Zambia’s debt pile is unclear. Officials now put the figure at anything between US$15 billion and $25 billion. The difficulty in establishing a number internally demonstrates just how far government has lost control. The former finance minister Felix Mutati, whom Lungu replaced on 14 February with commerce, trade and industry minister Margaret Mwanakatwe, has told confidants that he was not aware of all the loans contracted during his tenure. Ministries increasingly bypassed him, and the Central Bank. That Mutati was trying to curb borrowing is one reason, say sources in the governing Patriotic Front (PF), that he was demoted to the Ministry of Works and Supply.”

It added that the PF government had tried to make its debt appear lower by not counting loans that were not yet disbursed, “a dubious exercise when the debt is contractually binding”.