By BUUMBA CHIMBULU
THERE is no cash in the treasury to service the US$750 million Eurobond which is falling due next year in September, according to the Finance and National Planning Minister, Dr Situmbeko Musokotwane.
The minister has however indicated that there is a provision in the 2022 national budget to refinance it should Zambia’s creditors reach positive negotiations with the government.
Dr Musokotwane explained that part of the US$2.4 billion appearing as external borrowing in the 2022 national budget may be used to refinance the Eurobond.
He said this yesterday in Lusaka at the Zambia Institute for Policy Analysis and Research (ZIPAR) analysis of the 2022 national budget meeting.
“The US$2.4 billion appearing as external borrowing, out of that there is US$700 million, there is a provision there for paying off the Eurobonds maturing next year.
He also said part of the money which would be borrowed would be spent on completion of projects left by the previous government which were above 60 percent.
“So the bulk of indebtedness are the projects which the PF government left, these are ongoing projects and we feel that the stage at which they are, we cannot halt them because they will be white elephants. So the decision is to continue with the projects so that we complete them,” Dr Musokotwane said.
And Zambia ZIPAR Executive Director, Herrick Mpuku, said Government should consider reforming the corporate tax structure.
Dr Mpuku said there was need to simplify and standardise the corporate tax rate further to lessen potential distortions and attract Foreign Direct Investment (FDI).
He noted that despite the projected losses, the corporate tax revenue was projected to drastically increase from K9.11 billion in the 2021 to K16.4 billion in the 2022 budget.
The minister proposed to reduce Corporate Income Tax to 30 percent from 35 percent.
“We at ZIPAR view this year’s budget theme as a bold statement that sets the tone for the government’s economic crisis with a depressed economy, high inflation and considerable debt overhang,” Dr Mpuku said.
Meanwhile, United Nations resident Coordinator in Zambia, Coumba Mar Gadio, welcomed the positive developments that have come with the budget announcements – towards free education, women’s and youth empowerment and investments that would support the most vulnerable.
“The economic environment is indeed challenging, but we are optimistic that the budget implementation will be prioritised particularly towards social sectors,” Dr Gadio said.