According to a senior government official linked to the Euro Bond programme, several factors have been cited among them the PF government’s inconsistency in policies and President Sata’s closeness to Zimbabwean President Robert Mugabe.
The other factors that had allegedely negatived the sale is the crackdown on opposition by the PF regime.
The source said the failure to sell the Euro bond may lead to the creation of a big gapping hole in the budget that may lead to serious fuel shortages and drugs in hospitals.
The source said the MMD government was on course with the programme which the PF government has failed.
In March this year the World Bank told a Parliamentary Committee that Zambia was not going to sell the Euro Bond because the government was inconsistent on policies, among other reasons.
A Eurobond is a promisory note targeted at the Eurozone for infrastructure projects, such upgrading electricity generation infrastructure, construction of roads and bridges. Bonds issued by governments like Zambia or other sovereign institutions have low interest rates.
The money markets ability to take up bonds is based on the confidence in that government and its economy.
Zambia’s credit rating of B+ by Fitsch in July 2011 under the Rupiah Banda government, aroused much interest in interest lenders to give government money but Zambia has since been downgraded to unstable economic and political environment in February 2012.
Last December, financial giant Bloomberg referred to Zambia as a classic case of why you can’t invest in Africa citing lack of security for private equity.
The failure by the PF government to sell the Euro bond will leave a hole in the 2013 infrastructure budget and may force Zambia to use all reserves, if there are any left, thereby making the country even less credit worth which may result in hard times for the population.
Currently, the PF government intends to raise money for power generation by increasing electricity tariffs and other taxes.