CABINET has approved a $418 million loan from China to rehabilitate Copperbelt urban roads.
And Cabinet has given further approval for the government to borrow $65 million for the Lusaka water and sanitation project.
According to sources, Cabinet approved a $418 million loan from the Development Bank of China for Copperbelt roads to be undertaken by the Ministry of Works and Supply.
“That loan was approved because it’s like they are in a hurry to start doing some works on the Copperbelt to cushion the mess created by the [mine] retrenchments. The only problem is that government is broke so they will have to borrow that money and it will be paid back after 11 years,” the sources said.
“According to what we were told [in Cabinet], government doesn’t have the money to finance the project even from the resources from taxes. They said the loan attracts 3.15 per cent per year, including other charges like commitment fee and front end fee, with a grace period of four years.”
The sources said the money is meant to upgrade and build new roads totalling 406km in selected Copperbelt towns.
“And we also discussed the approval of another contraction of a $65 million loan from the World Bank meant for water and sanitation projects in Lusaka,” the sources said.
“They are saying there is need to strengthen the capacity of the Lusaka Water and Sewerage Company to manage sanitation services. But this one, according to the Ministry of Finance, will have to be paid back within 32 years.”
The sources said it was a huge risk for the PF to continue borrowing while the government was already stressed financially.
“Although this is meant to impress the people on the Copperbelt, the timing is wrong.
There is something that the Ministry of Finance is not explaining, because if you remember, the President mentioned [during his press conference] that he had suspended the construction of new roads so that the money can go to priority areas. Some of us as MPs, we were happy because our people are talking about hunger, fertiliser and so on,” said the sources.
“So it was surprising that we are getting all that money on loan for more roads when the President already gave direction on overspending on road infrastructure. The other problem that is there is that when China lends you money, there is a condition that the contracts for making these roads will have to be given to the Chinese construction companies, which means the money goes back to China. It doesn’t stay in this country.”