*PF using Forex Reserves on Political Campaigns*
Zambia’s foreign exchange reserves have hit rock bottom. Our sources at the Bank of Zambia and Ministry of Finance have informed us that the foreign exchange reserves are about $943.9 million (including $16.9 million raised from portfolio investors that bought GRZ bonds). The projected $1.3 billion includes foreign exchange amounting to $373 million expected to be raised from selling GRZ bonds to foreign portfolio investors and proceeds from a newly devised foreign exchange retention scheme.
Under the retention scheme, all government and quasi-government projects must sell their foreign exchange to the government. So far, these projects have not received any substantial foreign exchange as most donors reduced or suspended support to projects on account of challenges arising from the COVID-19 pandemic. The issued GRZ bonds’ uptake to foreign portfolio investors on 30th October 2020 was very poorly subscribed and only raised $16.9 million.
Sources close to the Ministry of Finance informed us that by 21st April 2021, Zambia would have accumulated debt arrears amounting to $229.84 million on the Chinese and Eurobond creditors. This includes the $110 million on which the Chinese Development Bank gave the country a six-month moratorium up to the end of December 2020. Other amounts are a $42.5 million, debt service on the second 2020 installment on 2014 Eurobond (due on 13th November 2020), $56.25 million first 2021 installment on 2015 Eurobond (due on 21st February 2021), and $21.09 million first 2021 installment 2012 Eurobond (due on 21st April 2021).
As opposed to prioritizing debt service payment, the PF-led government has resolved to spend $227 million of the remaining $943.9 million foreign exchange reserves on political campaigns of what they considered a must-win 2021 election—all driven by the panic arising from the theft of government resources they have been involved in over the years.
PF is laundering the $227 million stolen from the foreign exchange reserves using the Ministry of Agriculture’s Fertilizer Input Support Program. This program involves importing overpriced 350,000 metric tonnes of fertilizer whose landed cost is $450 per tonne and was sold to the government for $1,100.