FINANCE minister Alexander Chikwanda has obtained Cabinet approval to acquire a US$52.5 million loan from the World Bank which was rejected by president Michael Sata in August 2014. And Cabinet has also authorised Chikwanda to borrow another US$70.1 million loan from the Nordea Bank of Denmark to give to Kafubu Water and Sewerage Company. Cabinet last week approved a health services improvement loan amounting to US$52.5 million from the World Bank. Cabinet sources disclosed that the loan proposal was first made in August and that it was rejected by president Sata.
“The memorandum was submitted to Cabinet for consideration on August 18, 2014. But president Sata did not grant the Minister of Finance consent to contract this loan. He advised him to consider finding other sources of finances for the project, like from taxes and domestic borrowing,” sources said. “This is the same health services improvement loan proposal that the minister has taken back to Cabinet, seeking approval and since president Sata is no more, approval has been granted. The minister claimed that the options president Sata advised him to follow were not desirable means of financing the project.” The sources said Chikwanda’s rate of borrowing would make it difficult for another government to service the loans.
“This particular loan has a repayment period of 40 years with a grace period of 10 years. What that means is that honourable Chikwanda is not borrowing for the PF government to pay back; he is borrowing for whichever government that will come in 10 years’ time to service the loan,” sources said. And the sources wondered why Chikwanda would be seeking a US$70.1 million loan from Nordea Bank of Denmark for a water utility.
“Honourable Chikwanda has pushed government borrowing to the limit. He doesn’t want to leave room for any further borrowing once he leaves office. How else can he justify the contraction of a US70.1 million for Kafubu Water and Sewerage? How many water utilities in the country need government support?” Sources wondered. The sources said the loan was meant to support Kafubu Water and Sewerage Company to strengthen its capacity to service urban areas of Ndola City, Luanshya and Masaiti districts. “Honourable Chikwanda claims that Zambia’s debt is sustainable over the medium to long term, but that is not the absolute determinant for borrowing.
You have to look at the annual budget allocation towards foreign debt management. On the other hand, look at where you found foreign debt before forming government. This is not the last time government is borrowing, but by the time our minister will be leaving office, we are likely to hit the cautious line,” sources said. Last month, Cabinet authorised Chikwanda to contract a US$103 million loan from China’s EX-IM Bank to repay a LAP GreenN loan for the upgrade of Zamtel. Late president Sata had rejected Chikwanda’s proposal to repay the loan on behalf of LAP GreenN. – See more at: http://www.postzambia.com/news.php?id=4589#sthash.7sP10dVq.dpuf