Prof Saasa warns Govt on Eurobond

THE Government must utilize the new US$1.25 billion Eurobond in the most productive and effective manner possible because it is the most expensive bond any African country has ever acquired, economist Professor Oliver Saasa has advised.

Professor Saasa said in an interview that the new Eurobond was the most expensive ever borrowed in Africa because of procedure used in acquiring it.

“The rate at which we picked the bond is one of the highest any African country has ever gotten and that is very expensive money. There is no question about it. It is expensive in terms of interest rate and also the procedure because banks are involved,” Prof Saasa said.

He said it was important that the money was expended in a manner that exhibited prudence and accountability in its utilization.

Prof Saasa emphasized that government considers cutting on its excessive expenditure which he said was draining the country.

Prof Saasa said reducing expenditure such as personel allowances, conferences and travel, adding that: “all these really put together and the effect of things expensive, expenditure should be prudent.”

“What is important is the expenditure pattern and we must make sure that we prudently use this money  in a manner that will secure us the guarantee that we will be able to pay it in the next 10 years when it falls due,’’ he said.

Meanwhile, Zambia’s costs for the new Eurobond has soared compared to the debut sale in 2012.

Zambia’s banker’s fees for the Eurobond have soared to $38.4 million compared to $4.14 million in fees and commissions for banks and lawyers in the last bond.

Securities for the bond were sold at 97.257 of face value, a discount premium of $34.3 million, pushing total cost for the transaction to $38.4 million.

Yields on the Eurobond were 9.38 percent at sale, making it the most expensive dollar debt issuance for an African government.