JCTR urges govt to implement debt management strategy

JCTR urges govt to implement debt management strategy
By Joan Chirwa
Monday May 19, 2008 [04:00]

FAILURE to implement a debt management strategy and the lack of a policy continue to be major weaknesses for Zambia's debt position, the Jesuit Centre for Theological Reflection (JCTR) has stated. JCTR Debt, Aid and Trade programme coordinator Muyatwa Sitali stated that the lack of a debt management

policy and failure to implement a strategy were recipes for another debt trap as lending institutions continue to offer credits to Zambia following the country's improved credit rating after having reached the Highly Indebted Poor Countries (HIPC) completion point.

"In Zambia, the delay to reform the debt legal framework, failure to implement a debt management strategy and the lack of a debt policy continue to be a major structural weaknesses which can be taken advantage of to reverse the gains of debt cancellation," Sitali stated.

He further urged the Zambian government to implement debt management policies and strategies and ultimately put in place a debt management legal framework which would provide parliamentary oversight, induce regular debt management strategic plans and a transparent and broadened debt contraction process.

During the 2008 budget presentation, finance and national planning minister Ng'andu Magande indicated that the government would intensify efforts to consolidate the legal framework governing the contraction and management of debt.

"Some creditors have delivered their part of debt relief amounting to well over US$5 billion while some creditors such as Brazil and Russia have not yet done so. This is one of the weaknesses of the creditor institutions who did not abide by the requirements of the HIPC process through cancellation of all the debt. At the international level, our call to these countries which have been ‘free riding’ is that they should ‘finish the work’ by delivering their part of debt cancellation," he stated. "

This needs immediate follow-up with a clear map of action in order for Zambia to effectively put in place mechanisms that can provide Zambians with a better way of managing public debt. We, therefore urge the government to ‘finish the work’ by quickly producing a roadmap for this process and making sure the legal framework is completed and implemented by 2008.

"We continue to point government to the JCTR proposed Debt Management Bill which provides for Parliamentary oversight and creates space for broader transparency and accountability to the Zambian people in the contraction and management of public debt."
According to the Central Bank's recent data, Zambia's total external debt now stands at around US $1.1 billion (approximately K3.7 trillion), taking an upward trend a few years after most of the country's debt was cancelled by the lenders.