Sunday, July 27, 2014

Zambia won't slide back into debt trap - Chikwanda
By Kabanda Chulu
Mon 20 Jan. 2014, 14:01 CAT

ZAMBIA will not slide back into a debt trap because President Michael Sata is a good economic manager who doesn't allow careless borrowing and excessive expenditure, says finance minister Alexander Chikwanda. And Chikwanda says people making assertions of his resignation are after his job.

Meanwhile, Chikwanda says the Industrial Development Corporation (IDC) is a reincarnation of ZIMCO that would be a holding company for all state-owned enterprises.
Chikwanda also wondered why Zambians believed the International Monetary Fund (IMF) more than their own government on the country's economic status.

He said the government was not worried about issues to do with debt management because everything was on the right path.

"2013 was a difficult year; there were lots of challenges but it also created opportunities for us to think and institute procedures and systems to effectively run the economy. The budget deficit ended at over eight per cent and one key factor was the increase in emoluments for public service workers, whose unions negotiated far above what was budgeted for and we gave in since we are a listening government," Chikwanda said during last night's Sunday Interview programme on ZNBC TV. "By-elections didn't contribute to the deficit since they are budgeted for and if the Electoral Commission exhausts what was planned, we do replenish their coffers. Even new districts are budgeted for, so those saying we lost focus and started appeasing people are wrong because President Sata is a good economic manager, who doesn't allow careless borrowing and excessive expenditure. Anyway, what is political about a school? What is political about procurement of fertiliser and medicines? We are committed fiscal discipline and we try to spend according to the budget. Of course, there are times when national priorities arise like the salary hikes for workers."
He said it was surprising that Zambians believed what the IMF says, rather than their own government.
The IMF has projected a 7.4 per cent budget deficit for Zambia, while the government has set it at six per cent.
"IMF doesn't run the economy and we have no programme with them. We are not borrowing from them, they are not the alpha and omega of truth because they are not adequately informed, especially when you just talk to an individual. Zambia is also IMF as a member and when a delegation comes into the country, we avail them all documents and they meet other stakeholders so IMF hasn't lost faith in this government; it is only one individual making his assessment," Chikwanda said.
He also said the government would not give in to demands by some people that the wage freeze be lifted.
Chikwanda said the government was committed to ensuring effective debt management systems.
"People are entitled to express their opinions but we listen attentively even to my predecessors. Last month, Dr Situmbeko Musokotwane made some valid remarks in Parliament and we noticed that what he said made sense but there are some former finance ministers who pour scorn on me for no apparent reason since they don't have details," he said. "We are not worried because we are doing the right thing on debt management. The agreed norm is that for internal borrowing the threshold is 25 per cent of GDP but our debt stands at K17 billion, which is 15 per cent of GDP and for external borrowing, the threshold is 40 per cent and our debt is US$3.1 billion which is 14 per cent of GDP, so we are far below the agreed norms."
Chikwanda said budget deficits should be discouraged because the government pays a lot on debt servicing.
"This is why we are putting in place measures to generate enough revenue so that we can avoid borrowing. Of course, some people are saying windfall taxes for the mines but that is a 'fetish' which some people want to hang on to whether it is logical or not. We do understand that contribution of the mining sector is very low at five per cent but we shouldn't just look at taxes; there are other factors like having the mines generating 70 per cent of foreign exchange and creating jobs," he said. "Ideally, we want to see the mines contributing about 10 per cent and ZRA is being strengthened to ensure efficient revenue collection."
Chikwanda said his mission in government was to serve the people and not to make money.
"I will step down when I decide; I am here for a purposeā€¦to serve people. Poverty levels are too high and it is shameful, so we need to do something collectively. I am not here for money and I can't comment on the issue of resignation because I have never contemplated that issue. Some people have invented something which is not on my radar, not in my plans," he said. "Those saying that are after my job but they should know that I am not excited anymore; I have passed 75 years but I work not less than 13 hours a day, so I will leave at the right time. I was here in 1973 when I was 36 years old; I just want to serve the people."
Chikwanda also said the IDC was in the process of being established with funding from the privatisation trust fund and would be a holding company for parastatals to operate the way ZIMCO did.


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