CSPR calls for law to govern foreign debt

CSPR calls for law to govern foreign debt
Written by George Zulu in Monze
Sunday, May 24, 2009 7:14:57 AM

CIVIL Society for Poverty Reduction (CSPR) has said Zambia needs a legal frame work on foreign debt contraction and the utilisation of public funds by enacting the debt management bill.

And Jubilee Zambia Monze branch has called on government to finish the work by designing a desired comprehensive legal, policy and institutional debt management strategy which will promote transparency, accountability and good governance practices in the country.

In an interview in Monze on Friday, CSPR board vice -chairperson Partner

Siabutuba said the debt management bill, once enacted, would enable Parliament to give guidelines on what was borrowed in a specified period of time.

"Foreign debt contractions should be regulated by transparent mechanisms to promote accountability and a good governance system in the country. Zambia now is servicing a lot of unsustainable foreign debt because of lack of consultation and regulations, government just borrows without consulting the people of Zambia through representatives in Parliament and it is a dangerous scenario to operate and run a country like that. That is why as civil society in Zambia we are saying let parliament be involved in the contraction process of any loan, the move will promote accountability and transparency for both those in government and the people of Zambia,” he said.

Siabutuba said the current loan contraction system was not efficient and lacked transparency because the people of Zambia and other major stakeholders were left out in the process.

He added that in most cases, the system had promoted the spirit of dishonesty and mismanagement of funds.

Siabutuba cited the US$53 million loan from China meant for mobile clinics, saying government should have extensively consulted parliament and other stakeholders on the viability of the moveable clinics before going ahead with the loan.

And during the World Debt Day commemoration in Monze, Jubilee Zambia Monze chapter chairperson Alpheus Chibamu said poor and unsustainable debts continued to hurt the poor people in the country.

"As Jubilee movement, we have done our best and have made some notable achievements in areas of debt cancellations both through the HIPC and

Multilateral Debt Relief Initiatives, Zambia has received significant debt relief but problems and challenges Zambians face today are numerous and these gains have continued to be elusive to the grassroots and the voiceless poor Zambians," he said.

He said government should avoid contracting loans for seemingly unproductive purposes, citing the newly acquired earth moving equipment through a loan acquired from a commercial source, the EXIM Bank of China, saying such assets lacked the capacity to create sustainable debt repayments.

Chibamu also called on the government to revisit the bilateral relationship with China over external assistance which he said had a lot of conditions attached.

"Government needs to revisit its bilateral arrangements with China. We note that external assistance from China is usually in the form of grants or soft loans that are conditional. What emerges from the bilateral arrangements between China and Zambia is that Chinese aid is tied with conditions which are not favourable to Zambia," he said.

Chibamu said it was saddening that Zambia had not made up significant achievements in reforming policies, institutions and laws which contributed to the accumulation of external debt.

"Serious weaknesses continue to be observed in legal, institutional and policy arrangements. The borrowing process is far from transparency and laws governing borrowing has seemingly outlived its usefulness,î he said.

Chibamu also challenged donors not to lend money to low income countries as a money making venture, but to honor their commitment to the International Development Agency replenishment and avail more human development oriented grants than loans to least developed countries (LDCs).