$750m Eurobond to service economic growth points | Times of Zambia

. Infrastructure development

By KAIKO NAMUSA -
FINANCE Minister Alexander Chikwanda has assured the nation that proceeds from the US$750 million Eurobond will be used on growth promoting infrastructure projects.
Mr Chikwanda said in Lusaka yesterday, when he unveiled the 2013 National Budget, that the Eurobond proceeds would not be used for consumption as alleged by some concerned? sections of society.
Following the Eurobond successful inaugural entry on the international capital market in September this year, Government intends to propel infrastructure development of the country which would include mainly the transport, energy, human capital and access to finance, fees and transactions costs as well as discount premium.
Mr Chikwanda said $255 million would be injected in the energy sector mainly to address generation and transmission.
The road and rail sectors under transport would receive $430 million while human capital and access to finance, of which rehabilitation of central hospitals and access? to? finance small and medium? enterprises under the Development? Bank of Zambia, would receive $29 million and $20 million, respectively.
Fees and transaction costs would cost $1.4 million and the discount premium would cost $14.6 million.
On inflation, Mr Chikwanda said the Government aimed to maintain low inflation of not more than six per cent.
?In this regard, the Bank of Zambia will regularly review the performance of the Policy Rate and continue to use market-based instruments.
?In the foreign exchange market, the Government will maintain a flexible exchange rate regime and BoZ will only intervene to smooth short-term volatility and continue to build reserves,? Mr Chikwanda said.
He announced that in January next year, the central bank would effect the minimum nominal capital requirement from the current K12billion to K104 billion for locally owned banks and to K520 billion for foreign owned banks.
This would promote stability of the financial sector and enhance commercial banks? capacity to lend to the private sector.
?The level of financial sector intermediation is still low, with only 37.0 per cent of the bankable population having access to banking services.
?The lending-savings rate spread remains wide and our private sector lending to GDP ratio is low relative to regional averages,? he added.
In view of this, he said a Bill would be tabled before Parliament aimed at strengthening corporate governance in the sector, and enhancing both competition and consumer protection.
On debt and aid policy, the 2013 Budget indicated that with Zambia becoming a lower middle income country, access to grants and concessional loans would decline.
?While we continue to engage our cooperating partners in sourcing concessional loans and grants, Government will increasingly need to resort to non-concessional loans to supplement domestic resources to finance development,? Mr Chikwanda said.
He vowed to remain focused on sound financial expenditure and to ensure the country did not fall back into debt.
He said debt sustainability analyses would be conducted to promote transparency.
In the mining sector, Mr Chikwanda noted that the current problems in the management of mineral resources included the lack of systems to monitor and account for what was produced and exported, thereby adversely affecting domestic resource mobilisation efforts and development planning.
The Government would decisively address the matter through adequately resourcing and equipping the Ministry of Mines, Energy and Water Development to enable it to assess the nature, quality and quantity of minerals being mined and exported.
?To further augment these efforts I will present to this House a Bill to strengthen penal sanctions for false reporting of minerals and this entails that all mineral exports and proceeds will be strictly monitored through an integrated framework,? he said.
Mr Chikwanda said to further ensure continued accountability of public resources, the Government was currently designing a new framework of the public expenditure and financial accountability, which would expire in December this year.
He announced that one critical area in the new framework was public procurement reforms, and that from January next year, the Zambia Public Procurement Authority (ZPPA) would no longer undertake procurement on behalf of procuring entities but would assume a new role of oversight and regulating? public procurement.
He added that the use of direct bidding or single sourcing would require approval of the ZPPA until full decentralisation was completed.
On the decentralisation policy, he said the devolution of power to democratically accountable councils remained a central goal of the Patriotic Front administration.
To demonstrate this, Government would fiscally empower councils beginning next year by initiating revenue sharing arrangements and assist them to dismantle their debts and outstanding contractual and statutory obligations.

Source: http://www.times.co.zm/?p=15542

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