(DAILY MAIL) ‘State won’t borrow beyond K20 trillion’

‘State won’t borrow beyond K20 trillion’
By KASUBA MULENGA

GOVERNMENT says it has worked out a strategy to avoid falling into unsustainable debt following the country’s attainment of the Highly Indebted Poor Countries Initiative (HIPC) completion point in 2005.

Minister of Finance and National Planning, Ng’andu Magande, said yesterday that Government would ensure that it does not borrow beyond K20 trillion as a means of remaining within sustainable levels, especially that the country was generating significant revenue locally.

Mr Magande said this in Lusaka during a Zambia National Broadcasting Corporation live television programme sponsored by the Jesuit Centre for Theological Reflection (JCTR).

The discussion was on debt management, with a special focus on Zambia after the HIPC completion point.

“I want to assure the nation that Zambia will not get back into unsustainable debts because Government is getting a lot of revenue locally. We will only have debt within reasonable levels,” Mr Magande said.

This is amid concerns that after attaining the HIPC completion point, Zambia’s debt dropped to about US$502 million in July 2006 but sharply rose to US$1.5 billion by December the same year.

But the minister said after facing a heavy debt burden for a long time, Government would be careful with the way it borrowed money, and appealed to the public to entrust Government with such a responsibility.

Mr Magande said although under Cap 366, Part 10, of the Laws of Zambia, he had the authority to source loans for the country, he would ensure that the country did not contract loans beyond the K20 trillion ceiling.

He said if Government first allowed MPs to discuss the terms of acquiring loans from external sources, it would take too long to complete the process of getting the funds.

Mr Magande said there were technocrats competent to understand the nature or conditions attached to loans.

But Kabwata MP, Given Lubinda, said it was important that Zambians knew the terms of getting external loans through their representatives in Parliament.

Mr Lubinda, who is also chairperson of the Parliamentary Committee on Economic Affairs and Labour, said the country should enact a Budget law, to allow MPs to discuss the conditions attached to any loan before Government could access it.

He said since the current legislation did not provide for MPs to sue Government over loans which could have been obtained under dubious conditions, only a law could be effective to stop the State.

Mr Lubinda said as much as loans could be sourced for development programmes, it was important for the people to understand how they were sourced.

But Mr Magande said knowing where loans came from was insignificant because the main issue was development.

And of Jubilee Zambia/JCTR’s Muyatwa Sitali said although the country attained about 65 per cent debt cancellation, the solution to debt management had not yet been established.

Mr Sitali said there should be reforms to institutions and the legal framework on debt management in Zambia, as this was the only way to attain meaningful development.

He said the issue of MPs discussing conditions attached to loans before accessing them was paramount and should be enshrined in the legal framework regarding debt management.

And giving Zambia’s debt burden background, former President, Kenneth Kaunda, said when the country got independence in 1964, there were only 100 university graduates who included three medical doctors. He said copper prices later went down while international oil prices rose.

Dr Kaunda said because of this, his Government decided to borrow funds from the International Monetary Fund and World Bank to build schools, health institutions and other social infrastructure.

He said the two international financial lending institutions gave Government strict conditions on repayment but it negotiated to be paying in small amounts so that the country could use the rest on local development.

“But when we failed to follow their conditions, they came back hard on us with tricks. The world should remember this is a very unfair way of dealing with debt,” Dr Kaunda said.