Maravi

Debt contraction

Debt contraction
Written by Editor

IT is extremely important that those who are trying to write a constitution for us rise above personal and other narrow or petty interests. Obligations to the people of Zambia should take precedence over loyalty or commitment to self, to a political party, to a leader in power.

At no time and in no circumstances should those who are trying to give us a constitution place their personal interests first; they should subordinate themselves to the interest of the nation and the masses of our people.
They should proceed on all issues from the interests of the people and not from one's self interests or from the interests of a small group and to identify their responsibilities with the people at all times.

In our editorial comment on Thursday we urged the nation to be on high alert on the fight against corruption. We said that the signs are there, showing us that all is not well in this country and that we are still sliding along that slippery path of corruption.

We are therefore not surprised that the National Constitutional Conference (NCC) has for the fourth time failed to reach consensus on the clause in the Mung'omba draft constitution which seeks to compel government to disclose to the National Assembly terms and conditions of the loans they want to contract. On Wednesday, we carried a story where George Kunda and MMD members protested against this particular clause in the draft constitution on loan contraction. According to the story, as NCC chairperson Chifumu Banda announced that those in support of the clause were in the majority, George Kunda stood and beckoned other MMD and government officials to stand as they called for a division. After the division was granted, there was a round of applause and shouts of "ya, ya" from all those against the clause.

The question we ask is: why the applause? Is it a question of life and death to some of these people that they are ready to do anything to prevent this clause on loan contraction from being included in the draft constitution?

We are told that those who were in favour of the clause argued that it was a pillar in ensuring accountability in public debt contraction and expenditure management, that it served as a constitutional guarantee for greater financial supervision by the National Assembly and that the memories of the Vulture Fund debts which were shrouded in secrecy were still fresh. They also argued that if the provisions of the clause were to be provided for under an Act of Parliament, there would be no guarantee that the Executive would take such a bill to Parliament.

We are also told there were members who were of the view that the clause should be provided for under subsidiary legislation, arguing that while it was important to ensure transparency and accountability, there would be difficulties in implementing the provisions of the clause. And George made sure he forced government officials to support this position. It is clear from George's position that he has problems with a situation where the government is expected to be accountable. The question that begs an answer is: why are people saying there should be accountability? It is clear that the people calling for such a clause have seen a mischief in the current provisions and have asked for a change.

The recent dubious dealings of the government in the country definitely give credence to the people’s calls for accountability on this matter. The way our procurement system is being handled in this country clearly calls for strict laws that will ensure that the government borrows money for things that will improve the lives of our people and develop the country as opposed to buying mobile hospitals and 100 hearses. The refusal by the Executive to be held accountable when contracting debt raises questions as to whether there is something beyond debt contraction.

It is clear that Rupiah Banda, George and their friends in the MMD are not prepared to govern this country in a transparent manner. They are not prepared to disclose why they plan to borrow money from China and buy mobile hospitals from China because theirs is not to serve Zambians. They are afraid to take that route because they are not ready to explain their secret, corrupt dealings. And this should not be allowed. There is need for Rupiah and his friends to understand that debt contraction and its effects go beyond this generation. Rupiah, George and their friends in the NCC need to understand that the money they are borrowing now for unproductive ventures will have to be paid back by future generations. They may not see the effects of over-borrowing or committing the country to debt that could have been avoided now but the consequences can be grave. Not too long ago, our country qualified for the Highly Indebted Poor Countries (HIPC) completion point and had its debt forgiven by various bilateral and multilateral partners. During that process before the country's qualification to the HIPC, several measures to do with prudent use of finances were implemented and our people had to endure. Civil servants were actually asked to tighten their belts to ensure that the country gets out of debt and this debt had been contracted years back. Campaigns for debt cancellation were mounted by various stakeholders in the country to help our country, which could no longer sustain its debt. We eventually managed to get out of that situation but if we are not careful, Rupiah and George will drive the country back into the debt trap.

There is need for NCC delegates to look at this matter from a broader perspective as opposed to being preoccupied with self-preservation and short-term political interests. It is important for the government to be accountable to parliamentarians, civil society and all our people when committing the country to debt. Good loan procurement and debt management systems should help to contribute to sound poverty management. Yes, we agree with those who are calling for the respect of separation of powers of the three arms of government. However, involving Parliament in loan contraction will not in any way reduce the powers of the Executive. We strongly believe that there is no way the Legislature can prevent government from borrowing money if the intentions are good or if the money is aimed at investing in projects that will uplift the standards of our people who continue to wallow in poverty. The Legislature can only prevent the Executive from borrowing money if it is for projects like mobile hospitals and other unnecessary things. And that is why we need this important clause in our Constitution to prevent abuse and enhance accountability.

There are countries in Africa such as Uganda, which have provisions for parliamentarian ratification of loans in the interest of transparency and accountability and to ensure that they borrow for the right reasons. There are also countries like Namibia, which have placed a ceiling on debt contraction and cannot go beyond a certain percentage of their country's Gross Domestic Product in their borrowing. All these measures are there to ensure good governance and development for the benefit of the people. The fact that developing countries such as ours lack proper bargaining power on the loans leaves us at the mercy of international financial institutions and bilateral donors. And this is where the reality of the flaws in the distribution of power internationally comes to the fore. This is the reason why Parliament should be able to look at the conditions of all loans before the government actually commits the country.

Contractual processes should be as transparent as possible and Parliament should be involved to ensure that whatever money our country is borrowing is in line with the development priorities.

There is need for the delegates to the NCC to listen to the wishes of the majority of our people on the issue of loan contraction. We strongly believe that the involvement of Parliament will entail that every loan acquired reflects the wishes of the people because it is taxpayers’ money that will be used in repayment. We seriously need to improve our constitutional provisions regarding debt contraction and management because they are not strong enough to prevent the country from falling into another debt trap.

Labels: DEBT, GOVERNANCE, NCC

posted by MrK @ 7:04 AM