OPPOSITION United Party for National Development (UPND) president Hakainde Hichilema has charged that the country faces a real risk of holdout creditors taking legal action to seize sovereign assets after failing to pay US$40 million coupon.
In a statement issued, Mr Hichilema has since urged Government pay the US$ 42.5 million defaulted to unlock the support from bondholders, as it embarks on negotiations to restructure the debt.
“There are reports already that some creditors have embarked on a process to determine a possible payout to holders of default insurance, which may trigger a chain of collection of payouts that could lead to the recall of the loans in full.
Some banks are considering withdrawing confirmations of letters of credit issued to our business community, while others have suspended the global custody service and advised their clients to change future investment strategies for our country,” Mr Hichilema said.
He said to avoid the risk, Government should immediately engage the International Monitory Fund and request for a staff programme, as a basis to embark on the journey to earn credibility, creditworthiness.
The UPND leader further said the move will give the needed assurance to the creditors and potential investors of the commitment to a coherent recovery programme.
“The government must provide a full picture of our public external debt, domestic debt and private debt by quasi-government institutions that are not publicly guaranteed (including those contracted by companies now owned by ZCCM IH and IDC), arrears to suppliers of goods and services to the government and VAT refund exposure,” he said.
He also said the full disclosure must cover the terms on which the debt was contracted.
Mr Hichilema said Government should also scale up the engagement with all creditors, especially the bondholders, who feel that the level of engagement has so far fallen short.
He has further said Government should revise the 2021 budget which he says has significant gaps.
Mr Hichilema said the theme of the budget should be to cut all wasteful expenditures, such as slush funds, bogus expenditures on harmful and sub-standard goods and services, huge emoluments spent on politicians’ lifestyle, including the presidential jet.
“We encourage the PF to learn from the experience of Argentina and Ecuador, which only a couple of months ago successfully restructured their debt, with the active engagement of the bondholders.” he said.
