By Moses Kuwema
Wed 25 Sep. 2013, 14:00 CAT
BRITISH High Commissioner to Zambia James Thornton says major borrowing to fund the right capital expenditure is fine. And Engineering Institute of Zambia president Bernard Chiwala says there has to be a balance in terms of financing by debt or equity of domestic revenue.
Speaking when he featured on ZNBC's The Quest programme on Monday night, High Commissioner Thornton said major borrowing was fine as long as the capital expenditure helped the country to grow so as to provide the extra revenue which would enable the country to pay off its debt.
"Major borrowing in order to fund the right capital expenditure is fine. There are three different angles to this; you can raise revenue, you can borrow within the limits and you have got to ensure that your spending does not outstrip the revenue you raise. I hope the government has got all those in mind. So infrastructure is a very good way to go. You need power, you need roads, the railway, so you have to be careful to pick the right projects, I think," he said.
And High Commissioner Thornton said Zambia's debt and Gross Domestic Product ratio was still impressive, something he said was good.
The government and International Monetary Fund have projected the country's GDP growth this year at six per cent from the 7.1 per cent earlier projected.
And Lubansenshi Independent member of parliament Patrick Mucheleka says there is need to strengthen the aspect of domestic revenue mobilisation.
Meanwhile, Mucheleka said the ambitious social programmes that the PF government had embarked on would result in the country sliding into a serious debt trap.
And Chiwala, who is also permanent secretary in the Ministry of Works and Supply, said engineers were ready to support policy directions that the government was putting forward.
He said it was good that the funds that were borrowed through the use of the Eurobond went to infrastructure.
"We are suffering at the moment with power deficit and part of the money went towards the infrastructure so that we have power continuously so that mines and industries can operate. Part of it went to the roads. You need to open up the country so that you can take goods from one corner to the other part of the country. Tourism for example, the only place we know is Livingstone, but the Northern circuit needs to be opened up so that people can go there and see the attraction we have. It will require financing and the beauty of it is that it is not going for consumption. There will be a return that will come along the way so that must be supported and encouraged but it should be within the limit that we can afford continuously," Chiwala said.
During the same programme, Private Sector Development Association chairman Yusuf Dodia said it was unfortunate that President Michael Sata did not mention the issue of budget overrun and deficit in his speech to parliament last Friday.
Dodia said the budget overrun was a management issue and that he expected the President to fire some warning shots going into 2014.
Labels: BERNARD CHIWALA, DEBT, JAMES THORNTON
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