JCTR wary of Rupiah’s projects

JCTR wary of Rupiah’s projects
By Kabanda Chulu in Kitwe
Fri 10 June 2011, 04:00 CAT

ZAMBIA is heading towards a debt crisis because mining tax arrears and loan portfolios provided for in the 2011 budget are not sufficient to pay for the multi-billion kwacha projects being launched by President Rupiah Banda, says JCTR.

And Jesuit Centre for Theological Reflection (JCTR) programmes officer Sydney Mwansa has said government’s promise to buy all the maize harvested this year will entail additional borrowing because the 2011 budget had only provided K1.3 trillion but over K2 trillion would be required.

Commenting on the Kitwe and Lusaka urban road rehabilitation projects launched by President Banda, Mwansa has challenged government to be more transparent in the way it contracted loans to avoid another debt crisis.

“The mode of financing these works is of great concern since the K3.1 trillion road allocations in the 2011 national budget did not initially include these new road projects but others such as Mongu-Kalabo road, Siavonga-Sinazongwe road, among other roads, government will have to borrow or reallocate resources from other priority areas to complete these new projects.

Even though government is saying these projects will be financed by mining tax arrears and loans, the K555 billion tax arrears and the foreign and domestic loans of 2 per cent and 1.4 per cent of GDP respectively, provided for in the 2011 budget are not sufficient to pay for these mega trillion kwacha projects,” Mwansa said.

“Government will therefore have to borrow beyond the budgetary ceilings which will certainly worsen the country’s debt burden that lately has been on the increase and these loan amounts, conditionalities attached, loan repayment period and the interest payable on the loan must all be publicly disclosed to ensure transparency and to hold government accountable.”

He said maintaining fiscal prudence as elaborated in the 2011 budget and Sixth National Development Plan was essential for translation of macroeconomic gains achieved into tangible benefits.

“However, recent developments don’t guarantee this process, when looking at how much will be spent on maize purchase and government has already borrowed huge loans for contentious projects like mobile clinics and hearses and any further loan contraction will just destabilise the economy,” Mwansa said.

“It will certainly crowd out the private sector (domestic borrowing) as it exerts upward pressure on the bank lending interest rates and creates inflationary pressures.”

There have been growing concerns over the huge expenditure by government and rapid implementation of infrastructure projects by President Banda in the run-up to elections.

Recently, former finance minister Ng’andu Magande also expressed concern about the handling of projects and expenditures that were not even in the national budget.