Maravi

JCTR calls for debt management framework

JCTR calls for debt management framework
Written by Fridah Zinyama
Monday, December 08, 2008 5:38:29 AM

JCTR has expressed concern at the manner in which the government has been contracting loans as it risks sinking the country into more debt which currently stands at over US $2 billion.

In a press statement, Jesuit Centre for Theological Reflection (JCTR) programme officer for Debt Privilege Haang’andu observed that the government had been sticking to its debt management objectives in the past few years but the trend seems to have changed in the last few months.

“In October this year, the Debt, Aid and Trade Programme of the Jesuit Centre for Theological Reflection had commended the government for sticking to its debt management objective of raising adequate levels of financing at minimum cost and risk,” he stated. “But hardly two months later, the government has again signed a US $24 million credit facility with the African Development Bank (AfDB).”

Haang’andu observed that at that same time, the government had contracted a new loan of US $8 million from the Arab Bank for Economic Development in Africa (BADEA) for the rehabilitation of feeder roads on the Copperbelt Province.

“This loan is a concessional one – meaning that it is payable at low interest and over a long period of time - for budgetary support for 2009 and 2010. This loan also comes less than a year after government committed itself to a credit facility of US $6 million with OPEC for the rehabilitation of 40 feeder roads on the Copperbelt,” he observed.

Haang’andu stated that it was important to recognise that borrowing in itself did not amount to poor economic management or lack of sound development strategy but what was of concern to JCTR, particularly in the Zambian context, was the institutional arrangement under which borrowing was taking place and its intention.

“It is clear that the bad state of roads, especially in the agricultural parts of our country, is a major setback to the development of the agricultural industry in Zambia and therefore may need financing to improve them. In this time of rising food prices (maize), no greater need could be perceived than that of focusing on the improvement of the road infrastructure in order to promote agricultural productivity,” he observed.

Haang’andu stated that the prospective economic future of Zambia largely depended on the concrete transformation of its incredible agricultural potential.

“Although borrowing may not be avoided, it is fundamental and a matter of great urgency that Zambia puts in place a debt management framework to guide her practices of loan contraction and the management of the borrowed resources,” stated Haang’andu.

Labels: DEBT, DOMESTIC DEBT, JCTR

posted by MrK @ 5:37 AM