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MOZAMBIQUE GOVERNMENT MAY DEFAULT ON EUROBOND THIS WEEK: LESSONS FOR ZAMBIA

MOZAMBIQUE GOVERNMENT MAY DEFAULT ON EUROBOND THIS WEEK: LESSONS FOR ZAMBIA

January 17
10:49 2017

By Peter Chazya Sinkamba President Green Party of Zambia  secretariat@zambiagreens.org 

MY BEST WISHES TO THE ZAMBIAN PEOPLE FOR THE NEW YEAR ==================================================== Fellow Zambians, good evening. Tomorrow night, as Zambians across the country gather with family and friends to celebrate, I want to wish everyone a happy, prosperous and healthy New Year. This is special time of on calendar. As we celebrate the end of one year and the beginning of another, it time to reflect. It is time to look back and reflect on how gracious the good Lord has been onto us to live up to this time. In between, we lost our dear ones and blessed with new ones; we have lost property and gained elsewhere; we have lost ground in one area and gained elsewhere. And so on. Such is life! The year 2016 was extremely difficult for all of us. The Nation has been divided like never before. We have never experienced this level of widespread hate and political violence post-independence. As we celebrate the New Year, it is therefore imperative that we look back on this year with the knowledge, and hope, that brighter days lie ahead of us. Although our challenges are unprecedented, they are surmountable. Each of us must have the courage and determination to rise up and meet the challenges head-on. In the New Year, let’s reconcile and move on as one people. It is this spirit of reconciliation that has kept Zambia an oasis of peace and unity. It is this spirit that has kept the One Zambia One Nation motto alive for generations. And it is this spirit that will keep it alive for generations to come. So, if I offended you in any way, in the past year, I am so sorry. Please forgive me. Lets begin the New Year as great friends, once again! Happy New Year the President of the Republic of Zambia His Excellency Mr. Edgar Changwa Lungu, and the Patriotic Front! Happy New Year President Hakainde Hichilema and the UPND family! Happy New Year all other Opposition Leaders in Zambia, and your membership across the country! Happy New Year the Greens countrywide! Happy New Year everyone! And Happy New Year to myself! I LOVE YOU ALL, STAY BLESSED. HOPE YOU LOVE ME TOO!!! Peter Sinkamba President Green Party https://web.facebook.com/PeterChazyaSinkamba2021/

Peter Chazya Sinkamba President Green Party of Zambia

The Mozambique government says it won’t honor a $59.8 million Euro-bond interest coupon payment due tomorrow, January 18. If the Mozambique government fails to honour its interest obligations tomorrow, this would be Africa’s first sovereign default in five years. Government has a 15-day grace period to pay the coupon after Jan. 18, according to the bond’s prospectus. Analysts see Mozambique defaulting on the Eurobond interest obligations, on the $727 million bonds due January 2023.

Mozambique’s finances have deteriorated in the last few years, following the collapse of base-metal exports on the world market. Government’s capacity to make debt payments is “extremely limited,” the Ministry of Economy and Finance said last week.

The authorities are in talks with the IMF about resuming support to the country after it was suspended last year in April because of undisclosed loans. It is believed Mozambique government borrowed about $2billion from Russia, but this loan has not been officially declared on the country’s debt portfolio leading to suspension by IMF of aid to the country.

Now, Mozambique is saying it won’t pay the Eurobond interest coupon. BMI Research, a Fitch unit, says this could be part of government’s “tough negotiating strategy” to compel bondholders to accept more lenient repayment terms.  This won’t auger well for future negotiations.

Zambia, which has so far borrowed $2.8 billion with $750 million due in 2022, is so much dependent on base metals, mainly copper and cobalt. As a nation, we must draw hard lessons from Mozambique’s case. The first lesson is never to be over-dependent on base-metals, and other commodity markets for national revenue. This has proven to be gigantic problem. So, there is need to seriously consider diversifying from this ‘manga-manga’ agriculture of maize and cotton. There is compelling need to radically shift to high-value agriculture of cannabis/hemp, tomatoes, grapes, potatoes, vegetables, sugar cane and other high value crops which we can grow on large-scale for local and export. The second lesson is that government should avoid contracting secretive non-conventional loans, especially from China and Russia. These loans have serious implications in the long-run. For what goes around, for sure comes around.

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