Be careful with sources of loans, Lubinda warns govt

Be careful with sources of loans, Lubinda warns govt
Written by George Chellah
Sunday, June 14, 2009 4:08:35 PM

PATRIOTIC Front (PF) spokesperson Given Lubinda yesterday warned that the Zambian government must be careful with the sources of the loans they are acquiring. And Lubinda said the numerous financial scandals that have occurred in President Rupiah Banda's short time in office are enough basis for Zambians to demand a shift on loan contraction process.

Reacting to finance minister Situmbeko Musokotwane's statement that Zambia shall not stop borrowing because available resources are not adequate to sustain the financing of many projects around the country, Lubinda described Musokotwane's statement as misleading.

“Of course any sovereign state has the sovereign mandate whether to borrow or not. As a matter of fact, many progressive governments both in the North and the South are calling for a moratorium on debt repayments from poor countries leading to total debt cancellation in view of the current global economic/financial crisis,” Lubinda said.

“Musokotwane as Minister of Finance of one of the world's poorest countries should be joining his colleagues who at the moment are campaigning for cancellation of all debts owed by the poor south whose populations have found themselves suffering the dire consequences of the global financial crisis whose creation they had no role in.”

Lubinda said Musokotwane should be demanding a fair share of the stimulus packages that are being used in the financial capitals of the world.

“Musokotwane should be explaining to Zambians when we shall have a part of the recovery fund. He should be explaining to the citizens how the new funds made available to the IMF by the G8 shall affect Zambians. Going the route of loans during such a time when the very essence, relevance and efficacy of the International Financial System is undergoing tremendous scrutiny is cowardice,” Lubinda said.

“In addition, government must be careful with the sources of the loans they are acquiring. The whole debt architecture is being reformulated to the extent that illegitimate, supply-driven and odius debts shall not take as long to expose.

“Both the government of Zambia and the sources of the loans to Zambia must be alive to the fact that Zambia under the PF-UPND government shall not honour any loans that shall be proven to have been acquired for less than development of Zambia and her people. Loans for the procurement of mobile hospitals, whatever name called, fall in this category.”

He said Dr Musokotwane's remarks were misguided and very provocative.

“Musokotwane cannot pretend that a foreign debt of US$ 7bn, which is more than double the 2009 national budget, is a small amount. He also cannot pretend that he did not witness the amount of suffering that Zambians, especially the poor - who did not have a role in acquiring the debt in the first place - went through as a result of the US $ 7bn debt,” Lubinda said.

“Was Musokotwane living in ivory towers during the period when there were general salary freezes for civil servants, when Zambians died from preventable diseases due to lack of medicines in hospitals, when Zambia was forced to sale it golden silver - to privatise its industries- as a way of addressing its heavy indebtedness, when the government abrogated its responsibilities of providing basic social needs of the citizens because of the tight fiscal measures upon the country by credito multi-latera and bilateral organisations?

“Where was Musokotwane when the very peace and internal security of the country was put to a test through attempted coups detat arising from growing restlessness among the citizens? Where was he to impute that the debt was small? On which side of the debt-divide was Musokotwane when the Church-led civil society organisations under the Jubilee 2000 launched and sustained the spirited campaign for debt cancellation?”

Lubinda said Musokotwane's claim that his government had a system to guide on how to repay and service debts and that the debts were to be used for productive purposes was a baseless claim aimed at hoodwinking the people.

“The truth of the matter is that to date Zambia does not have any well defined and foolproof system for contracting debt, foreign or local. The available procedure is one that led to the accumulation of huge domestic and foreign debt over the years. With regard to foreign debt, the Minister of Finance alone with the approval of the President has the power to contract debt on behalf of the people,” Lubinda said.

“ Is this what he is claiming to be a system that is able to guide him? Zambians have not forgotten how they were put in a debt trap by their ministers of finance and their presidents who borrowed for useless ventures such as TIKA, or who sold national debt to Donegal who later sued for millions of dollars in interest etc. Zambians have not forgotten how they were forced in a debt trap for borrowing to impose on them a government whose popularity was waning on a daily basis.”

Lubinda said the numerous financial and management scandals that have occurred during President Banda's short time in office were enough basis on which the Zambian people should demand a paradigm shift on the loan contraction process in Zambia.

“What is to be said about Musokotwane/Banda's loan contraction procedures in the wake of the revelation by the President that the US$ 53m for the procurement of mobile hospitals from China was an offer from China?” Lubinda asked.

“What more with the finding of the Dora Siliya tribunal that single ministers can commit the Treasury to paying as much as US $2m for some questionable contracts? What more with government's inconsistency on taxation measures that affect multi-nationals?”