Boost sinking fund – CTPD
Written by Millennium on July 1, 2019
BUUMBA CHIMBULU writes
GOVERNMENT should allocate enough money to the sinking fund so that redeeming Eurobonds becomes possible, the Centre for Trade and Policy Development (CTPD) has said.
Government announced that it has set aside US$20 million for the refinancing of its three Eurobonds – the US$750 million, US$1 billion and US$1.25 billion, all falling due between 2022 and 2027.
But CTPD lead researcher Bright Chizonde said there was need to grow the sinking fund and set up an independent body to manage it.
Mr Chiozonde was speaking recently in Lusaka during the launch of a report on Zambia’s debt.
“The country’s Eurobonds should be refinanced in order to reduce external debt service payments, coupled with the setting up of the sinking fund with proper legal provisions for fund allocation and use,” he said.
Mr Chizonde said there was need to develop a strategic objective which should focus on redeeming the Eurobonds and implementing an International Monetary Fund country programme in the long term.
This, he said, could be achieved through developing a Eurobond redemption strategy and improving tax compliance to enhance domestic resource mobilisation.
“Zambia needs to develop a credible borrowing plan in line with macroeconomic stability and economic growth. Improve reporting of debt statistics to always reflect domestic arrears, publicly guaranteed debt and pipeline debt,” he said.
Mr Chizonde said Zambia should renegotiate Chinese loans and consider entering into public private partnerships with Chinese companies on strategic projects to reduce more accumulation of debt.
He said there was need for increased transparency on the contraction of Chinese loans and to limit financing to strategic projects.
“In the short term, Government should focus on halting debt accumulation, restoring investor, donor and private sector confidence as well as improving both public and private sector liquidity for economic recovery and macroeconomic stability,” Mr Chizonde said.