Saturday, February 22, 2014

PF wants to slide Zambia into another debt trap - Magande

By Abel Mboozi
Sun 01 Dec. 2013, 14:01 CAT

COMMENT - "And Dr Situmkeko Musokotwane last week said the rate at which Zambia's external debt is climbing is worrying." Wow, really. This is the same Finance Minister who shielded the mines from taxation, and justified that by saying "We can always borrow". Short memories, perhaps, or just blatant hypocrisy and corruption?

Zambia now has more sources to borrow from - Musokotwane
By Bright Mukwasa
Fri 04 Mar. 2011, 04:01 CAT

‘Zambia can’t stop borrowing’
Written by Kabanda Chulu
Thursday, June 11, 2009 12:28:12 PM

" ZAMBIA can’t stop borrowing because available local resources are not adequate to sustain the financing of many projects around the country, finance minister Situmbeko Musokotwane has said. "

"“And the US $7 billion debt we had, in absolute terms it was a small amount by any standards but through our inability to service it, that was too huge because economic activities that needed to be sprouted out of that did not happen.” " - MrK

IT is sad that the PF wants to slide Zambia into another debt trap that would be difficult to dismantle, Ng'andu Magande has charged.
Magande, who is National Movement for Progress president, said it is surprising that the PF government is against the re-introduction of windfall tax on mines when it is the only sure way of raising reasonable revenue for the country.

He wondered why the PF government which campaigned on the premise of re-introducing the windfall tax was backpeddling over the matter and was now resorting to huge external borrowing.

"Even if the government does not want to re-introduce this tax on mines, what other tax sources are they intending to get money from in the mining sector? Money lies in windfall tax and the PF should tell the nation whether it is its policy not to implement the windfall tax," Magande said.

Levy Mwanawasa's government in 2008 introduced a windfall tax on copper at 25 per cent owing to the sector's low contribution to government revenue which still stands at less than two per cent.

Magande, as finance minister then, said the government envisaged to earn at laest U$415 million annually from the windfall tax as mining companies accounted for over 80 per cent of the country's export earnings.

However, Rupiah Banda's government in 2010 scrapped the tax amidst calls from civil society and opposition political parties to have it maintained.

The PF during its campaigns in the run-up to the 2011 elections promised to reintroduce the tax but finance minister Alexander Chikwanda last year, categorically indicated that the windfall tax would not be brought back and called those calling for its re-introduction 'lunatics.'

Commenting on Parliament's decision to allow Chikwanda to increase Zambia's external borrowing ceiling from K20 billion to K35 billion, Magande said in Lusaka yesterday that Zambians had now seen for themselves that the PF does not mean well.

He said the expansion of the mining industry in Zambia was fast and that was where economic growth was coming from.

"The expansion of the mining industry is very fast, that's where all this growth is coming from and then we have growth of six to seven per cent but poverty is still high because there is no equitable distribution of wealth which is supposed to be done by the government," he said.

He said taking the route of external borrowing would only take Zambia back into a debt trap situation.

"Why can't we really learn? It was going to be a different scenario if we had people in government now that have never served in similar capacities. The minister of finance has been in government before, so are President Sata and Vice-President Scott, so why can't we learn from those mistakes?" Magande asked.

"There is no doubt that the decision to raise the external debt ceiling would plunge Zambia into the Third Republic times, where her external debts would swell to unimaginable levels, which is sad."

Magande said former president Frederick Chiluba could not buy medicine in hospitals and that he built no single school then because he was servicing the external debt.

"Even medicines were in short supply because the government could not buy them. It is therefore, sad that the PF want to slide Zambia into another debt trap that would be difficult to dismantle," Magande said.

And Dr Situmkeko Musokotwane last week said the rate at which Zambia's external debt is climbing is worrying.

Dr Musokotwane, who is the immediate past finance minister, said it was saddening that Zambia's external debt which stands at U$3.2 billion was getting pushed up because of quick borrowing.

He was debating a motion in Parliament moved by Chikwanda, asking the House to permit him to increase Zambia's external debt borrowing ceiling from K20 billion to K35 billion re-denominated currency.

"The rate at which Zambia's indebtedness is climbing is too fast. Two years ago the debt was U$1.5 billion, today it's U$3.5 billion, in two years, you are talking of an increment of U$2 billion, this is too fast," Dr Musokotwane said.

"UNIP increased the debt from zero to U$7 billion in 27 years now we are increasing the debt by U$2 billion in two years, this is worrying people," he said.

Dr Musokotwane said in the Yellow Book, external debt indicated that a U$2 billion bond would be issued in 2014, meaning that the debt would shoot to over U$5 billion by next year.

"In three years, from U$1.5billion to U$5.7 billion, this of course is now getting close to where we were when we got debt relief, which is definitely worrying," Dr Musokotwane noted.

He said external borrowing of 75 per cent was substantial and raised questions.

Dr Musokotwane said the external debt could even be more than U$3.2 billion because he was not too sure the control called 'contingency liabilities' was included in the amount.

"These are amounts of money that can potentially become real debts. Of hand is the ZAMTEL liability; there is no question of the fact that the Libyan company(Lap-Green) transmitted something like close to U$400 million to acquire ZAMTEL," he said.

"Obviously they will not accept that such money goes into the drain, it is a contingent liability subject to judgment or agreement to the government and of course with time, we don't expect the US$400 million to be less than $500 million then."

He said the same applied to the Railways Systems of Zambia which has reverted to Zambia Railways.

"So, if you add all these plus other smaller amounts, I suspect we could already be owing U$3.7 billion which means that in actual fact, we could have already reached the existing limit perhaps even exceeded it. So, the debt issue is obviously a serious one," Dr Musokotwane said.

Bweengwa UPND member of parliament Highvie Hamududu in his debate said it was wrong for the government to premise the 2014 national budget on the decision to increase external borrowing.

Labels: , , ,


Post a Comment

Subscribe to Post Comments [Atom]

Links to this post:

Create a Link

<< Home