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Acquisition of shares in mines will worsen debt crisis

• Acquiring additional stake in selected mines will increase the country’s external debt.
• Buying majority shares in mines goes against Economic Recovery Plan.
• President Lungu says acquisition of additional shares in mines will benefit the nation.

Centre for Trade Policy and Development (CTPD) says government’s plan to acquire majority stake in selected mines will worsen the country’s debt crisis.
CTPD Public Finance Researcher, Wakumelo Mataa told Money FM News that the acquisition of stakes in mines will force government to acquire more debt which will lead to the continued depreciation of the kwacha.
‘‘ Adding to our stock of external debt will lead to the continued depreciation of the exchange rate which will make the debt repayment in kwacha terms to go high, ’’ he said.
Mr. Mataa noted that the acquisition of more debt goes against the medium term reduction of debt to sustainable levels as enshrined in the Economic Recovery Plan.
‘‘It is a contradiction on government’s part looking at the huge stock of debt that we have as we should be working around implementing policies that will reduce the external debt,’’ he added.

He said this move will also make it hard for government to engage creditors on its proposal to defer Eurobond payments.
President Lungu announced yesterday that there is a deliberate strategy by his government to acquire additional stake in some selected mines to support the sector’s growth trajectory.
He said this will give the state the leverage required to utilize the defined mineral resources to benefit the nation beyond taxes.

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