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Politics Zambian government denies plans to handover power firm, ZEWASCO, to China

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Finance minister, Margaret Mwanakatwe, said the country has not offered any State Owned Enterprise to any lender as collateral for any borrowing.

Zambian government denies plans to handover power firm, ZEWASCO, to China play Zambia President Edgar Lungu with his Chinese counterpart Xi Jinping (Courtesy)
  • Zambian government has denied plans to cede its main electricity company, ZEWASCO, to China.

  • Zambia President Edgar Lungu 'received' another $30 million grant at the just concluded Africa-China summit despite warning.

  • The country’s outstanding debt as at March 2018, stood at $9.3 billion.


The Zambian government has denied plans to cede its main electricity company, ZEWASCO, to China over defaulting loan repayment, Reuters reports.

The country's finance minister, Margaret Mwanakatwe, stated this in a press statement issued on Thursday, September 13, 2018, responding to a publication by London-based Africa Confidential magazine.

Africa Confidential report on debt trap in Zambia

Africa Confidential in its September report, titled “Bills, Bonds and even Bigger Debts” claimed that Zambia risks losing its sovereignty to China which is bound to seize its national assets once the government defaults on loans.

The report also stated that a number of projects in Zambia are financed by China even though the amount of debt has been piling over the years.

"Since President Edgar Lungu came to power, Zambia has signed off on at least $8 billion in Chinese project finance. Over $5 billion of this has not been added to the total because Zambia insists the money has not been disbursed, and more large loans are in the pipeline," the report indicated.

ALSO READ: Nigeria dismisses talk of a possible takeover of its economy by China over the bilateral loan

Zambian government dismisses report on debt-trap

But the Zambian government dismissed the insinuation, saying it has not offered any State Owned Enterprise to any lender as collateral for any borrowing.

Zambian government denies plans to handover power firm, ZEWASCO, to China play

President Xi welcoming Lungur to China

(ZNBC)

 

The finance minister also dismissed assertions in the same report that it was in talks about a debt/asset swap deal with creditors, including the Chinese.

Zambia says it has made interest payments worth $341.82 million in 2018

Mwanakatwe said the country has made interest payments worth $341.82 million in the first half of the year, dismissing the $489 million figure in the Africa Confidential report.

ALSO READ: China is tightening its grip on Kenya's economy as loans to the East African nation hit Sh478 billion

Background of the story

IMF changes Zambia rating from moderate to “high risk of debt distress”

In May 2018, the International Monetary Fund changed the rating for Zambia from moderate to high risk of debt distress over gap deficits in Chinese loan.

The international organisation warned Sub-Saharan African nations over the pace of debt and the huge gap deficits.

In its report, it further stated that about 40% of low-income countries in the region are now in debt distress or at high risk of it, despite an overall uptick in economic growth.

Zambia government asks China for more loans

Zambian government denies plans to handover power firm, ZEWASCO, to China play

President Xi Jinping held talks with President Edgar Lungu of Zambia at the Great Hall of the People, 2015

(China embassy)
 

Despite the warnings, Zambia is one of the African countries whose leaders were in China recently for the 2018 China-Africa summit.

Zambia President Edgar Lungu was reported to receive a grant of $30 million for the Lusaka East Multi-facility Economic Zone electrification project from a number of Chinese companies.

Zambia’s outstanding debt as at March 2018, stood at $9.3 billion up from $8.7 billion at the end of 2017.

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