FRA owes farmers K979bn
By Gift Chanda
Tue 23 Oct. 2012, 16:10 CAT
THE Food Reserve Agency owes farmers K979 billion for the maize they supplied to the agency during the ongoing marketing season, a senior official said yesterday.
Chola Kafwabulula, FRA acting managing director, disclosed that the agency as at October 12 had bought 968,242 metric tonnes of maize valued at over K1.2 trillion.
He said the 968,242 metric tonnes, a bulk of which was bought from Southern and Eastern provinces, represents 97 per cent of the 1 million metric tonnes target to be purchased by the end of this month.
"FRA has since paid out over K279.5 billion on maize purchases while payments have continued to be made to farmers country-wide in order to offset the K979 billion outstanding balance," Kafwabulula said in an emailed statement.
He added that following reports of fraudulent activities, the agency had stepped up security measures to ensure that payments were only made to genuine farmers who supplied the maize.
Kafwabulula said all payments were being adequately screened with the help of experts in white collar financial crimes.
"The agency will continue to pay until all farmers receive their money for the maize supplied," he added.
"The agency hopes to pay all farmers by the first week of November, just after the close of the purchasing exercise on 31st October, 2012."
The FRA had targeted to buy one million tonnes of maize from small-holder farmers this year compared to the 1.3 million tonnes it bought last year.
Labels: CHOLA KAFWABULULA, DOMESTIC DEBT, FRA
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Zambia has raised $750 million in a debut 10-year Eurobond
TIME PUBLISHED - Thursday, September 13, 2012, 5:51 pm
Finance Deputy Minister Miles Sampa (fourth from left), Finance Permanent Secretary Felix Nkulukusa Bank of Zambia Deputy Governor Dr Bwalya Ng’andu and other officials from Zambia, Barclays Bank and Deutsche Bank celebrate after the launch of Zambia’s US$750million-worth bond on Wall Street in New York on Thursday 13 September, 2012. Picture by Chibaula D. Silwamba GRZReuters reports that Zambia has raised $750 million, on the debut 10-year Eurobond with a yield of 5.625 percent on today, a market source said, adding that more than $11 billion of orders were received for the issue.
The popularity of the issue by Africa’s biggest copper producer reflects strong investor appetite for scarce frontier African paper.
The yield was 25 basis points tighter than Zambia’s initial 5.875 percent guidance.
The size of the Zambian bond also means it will be eligible for the JP Morgan EMBI Global index, increasing its appeal to major investors.
The southern African country, which is rated B+ by Fitch and Standard and Poor’s, plans to use proceeds from the issue to upgrade its infrastructure, particularly in the transport and energy sectors.
Fitch cited the country’s buoyant copper mining sector, political stability and GDP growth of over 6 percent as strengths, but said prospects for growth beyond 2012 were less certain due to dependence on copper, which accounts for about 80 percent of exports
[Reuters]
Labels: BONDS, DOMESTIC DEBT
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Zambians deserve to know why government is borrowing - Magande
By Ernest Chanda
Mon 28 May 2012, 13:29 CAT
NG'ANDU Magande says Zambians deserve to know why their government is borrowing money, including the terms and conditions attached.
Magande who is opposition National Movement for Progress president and the country's longest serving finance minister said it was good that the draft constitution has adopted
a clause compelling government to get National Assembly approval for any loans it wants to contract.
In 2009, the National Constitutional Conference (NCC) overwhelmingly rejected the clause on grounds that it would delay developmental projects that needed to be undertaken urgently.
Under the current arrangement, the government borrows money without National Assembly approval, regardless of the terms and conditions attached to those loans.
But the technical committee appointed by President Michael Sata to draft a new constitution has reintroduced the clause.
Article 282 of the draft constitution states that: "(1) The government may, subject to this article, borrow money from any source. (2) The government shall not borrow, guarantee or raise a loan on behalf of itself or any State organ, State institution, authority or person except as authorised by or under an Act of Parliament. (3) Notwithstanding clause (2), the government shall - (a) lay before the National Assembly the terms and conditions of the loan which shall not come into operation unless approved by a simple majority vote of the National Assembly…"
And clauses 4, 5 and 6 of the same Article state that: "The terms and conditions required to be laid before the National Assembly under clause (3) shall include the following: (a) the source of the loan, (b) the extent of the total indebtedness by way of principal and accumulated interest; (c) the provision made for servicing or repayment of the loan; and (d) the utilisation and performance of the loan.
"(5) The National Assembly may, by resolution, authorise the government to enter into an agreement to give a loan or grant out of the consolidated fund or any other public fund or account. (6) An agreement entered into under clause (5) shall be laid before the National Assembly and shall not come into force unless it has been approved by a vote of not less than two-thirds of the Members of Parliament."
Magande said Zambians had for many years suffered because of loans contracted by their government, some of which they did not know the purpose.
"I think that would be a good idea because when the government is contracting debts, normally it is the minister of finance who leads the negotiations and also of course other ministries join in. But when things go wrong and we need to pay those debts the people who suffer are the general populace because when we are servicing these debts the citizens can't get good schools, they can't get medicines, they can't get fertiliser," Magande said in an interview.
"So it would be a good mechanism of trying to make the citizens understand what the government wants to borrow and for what purpose; so that at the time that our grandchildren have to pay the debts they will know that those debts were committed to a good cause. It is just that the information which had been proposed in the NCC constitution that time was too detailed for a constitution."
He said the people through their representatives in the National Assembly should have a say on any loan contracted.
Magande said there were some loans contracted by the government which should not have been.
"But the way things are done now, I was in the ministry, but I felt that some of the loans perhaps should not have been contracted in the manner they were. For example, there's a huge loan which the RB Rupiah Banda government got for Kalabo-Mongu road. Now, everybody is saying, surely you spend K1 trillion on one road in one part of Zambia," said Magande.
"What are the benefits going to be for the rest of the Zambians in Mpulungu, in Monze who have to pay back that loan? And perhaps if we are able to do that, then some of these big projects would get a national debate before we even undertake them so that they don't become just petty projects for the leader who is there at the time that perhaps you are putting that loan."
Labels: CONSTITUTION, DOMESTIC DEBT, NCC, NG'ANDU MAGANDE
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Government dependency on domestic borrowing worries ZNFU
By Chiwoyu Sinyangwe
Thu 17 Nov. 2011, 14:00 CAT
ZNFU fears that the government's plan to
finance 21.1 per cent of the 2012 national budget via domestic borrowings is likely to counter intentions of freeing more liquidity to local entrepreneurs. The Zambia National Farmers Union stated that it would have preferred to see the government mobilise money via broadening the tax revenue base.
The influential union of commercial and smallholder farmers in the country stated that the proposed government borrowing of 1.3 per cent of the GDP was likely to "crowd out" as commercial banks will find it attractive to lend to the government than to the agriculture sector because of the perceived risk of the sector.
"The proposed government borrowing from the domestic market of about 21.1 per cent of the total budget will create competition with the private sector on domestic borrowing," ZNFU stated.
"Government should consider broadening the tax base as opposed to resorting to domestic borrowing in the long term so that resources from the domestic market can be freed to the private sector. This will help stimulate private sector borrowing and investment so as to create the much-needed employment and further revenue for the government."
ZNFU supported the government's efforts to help reduce the cost of finance after it reduced corporate tax by commercial banks to standard 35 per cent from the previous 40 per cent on the backdrop of the reduction in statutory reserve ratios which would create an extra K700 billion in commercial banks to lend out.
ZNFU also stated that there was need to address the import duty on agriculture inputs and zero-rate value added tax on agriculture products and also remove livestock levies hindering the development of the livestock sector.
The farmers body stated that the fuel levy paid by the agriculture sector, which they said doesn't serve its purpose, also needed to be removed.
And ZNFU applauded the PF government for allocating about K 1.7 trillion of its inaugural K27. 7 trillion towards the agriculture sector, a jump from K1.2 trillion in 2011.
ZNFU, however, stated that the 2012 agriculture allocation of six per cent was still short of government commitment of increasing agriculture sector allocation to 10 per cent in line with the Maputo declaration and under the Comprehensive African Agriculture Development Programme (CAADP) to propel the agriculture sector to higher heights and contribute to inclusive growth.
ZNFU stated that it was "enthralled" that the 2012 national budget recognized constraints facing the agriculture sector and proposed strategies of ensuring that key factors affecting the sector are addressed.
"Issues raised which are of importance to the Union include the fact that the agriculture sector still suffers from low productivity, is still rain dependent, lacks appropriate and affordable breeding stocks, low value addition, and is hindered by poor marketing and low investments," stated ZNFU.
Labels: DOMESTIC DEBT, ZNFU
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MMD owes NAPSA K460m in unpaid rentals
By Chibaula Silwamba
Thu 06 Oct. 2011, 05:40 CAT
MMD owes NAPSA about K460 million in unpaid rentals for its national secretariat in Lusaka, according to well-placed sources at NAPSA. Sources at National Pension Scheme Authority (NAPSA) disclosed that the former ruling party had failed to settle the rentals for a long time and NAPSA's efforts to recover the money were not yielding any positive results.
"Our management has since written to the former ruling party MMD demanding that it pays the K460 million within one week. In fact, if the MMD fails to pay within the time we have given it, we will send bailiffs to enforce the recovery of the rentals," the sources said. "So just wait and see. The bailiffs will soon swing into action and the MMD will be left without offices if they don't pay."
MMD national chairman Michael Mabenga referred queries to party national secretary Major Richard Kachingwe, whose phone remained unanswered by press time.
When the issue of unpaid rentals was introduced to him, Mabenga responded: "Why don't you ring the national secretary? He will be in a position to know all the details. That is the man who keeps all records; he will be able to tell you the fair information."
Efforts to contact Maj Kachingwe and deputy national secretary Chembe Nyangu proved futile as they were not answering their phones while MMD deputy national chairman Kabinga Pande said he was in a meeting.
Former president Rupiah Banda had presided over a number of irregularly awarded contracts with NAPSA, among them the K75 billion Meanwood deal and the redevelopment of the Society House building, which raised a lot of concern among members of the public.
The MMD conducted one of the most extravagant campaigns in Africa with hundreds of vans, trucks, abundant chitenje materials, t-shirts, badges, Rupiah Banda-branded sweets, MMD campaign message-inscripted ‘flags' placed on streetlight poles and trees including bicycles among others items distributed to would-be voters.
Seventy-four-year-old Banda and the MMD lost to President Michael Sata, also 74, and his Patriotic Front (PF) party in the September 20 elections
Labels: DOMESTIC DEBT, MMD, NAPSA
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Caritas recommends below 1% of GDP domestic borrowing
By Fridah Zinyama
Tue 02 Nov. 2010, 03:59 CAT
CARITAS Zambia has advised the government to limit domestic borrowing to less than one per cent of Gross Domestic Product (GDP), saying such a move would help to empower citizens. The government wants to reduce domestic borrowing from 1.9 per cent to 1.4 per cent of GDP.
But Caritas Zambia noted that reducing domestic borrowing from 1.9 per cent (2010) to 1.4 per cent (2011) was good although the government needed to have political will to achieve this target.
“From past experience, the government has failed to do this as domestic borrowing has continued to increase,” Caritas Zambia stated.
The civil society organisation further noted that fiscal discipline was going to be necessary if government was to bring down domestic borrowing which increases the burden of domestic debt.
Caritas Zambia further stated that the government needed to reduce their appetite for domestic borrowing as it tended to crowd out private sector investment.
“Private investment is essential for ensuring that there is not only economic growth but also sustainable development and poverty reduction,” the organisation stated.
Caritas Zambia noted that the private sector helps to increase the productive capacity of an economy, creates employment, brings innovation and new technologies, and boosts income growth.
“This can only be achieved if government reduces its domestic borrowing not increasing it or maintaining it at its high levels,” stated Caritas Zambia. “A reduction in domestic borrowing by government may contribute considerably to the reduction in interest rates.”
Labels: CARITAS, DOMESTIC DEBT, GDP
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Caritas recommends below 1% of GDP domestic borrowing
Caritas recommends below 1% of GDP domestic borrowing
By Fridah Zinyama
Tue 02 Nov. 2010, 03:59 CAT
CARITAS Zambia has advised the government to limit domestic borrowing to less than one per cent of Gross Domestic Product (GDP), saying such a move would help to empower citizens. The government wants to reduce domestic borrowing from 1.9 per cent to 1.4 per cent of GDP.
But Caritas Zambia noted that reducing domestic borrowing from 1.9 per cent (2010) to 1.4 per cent (2011) was good although the government needed to have political will to achieve this target.
“From past experience, the government has failed to do this as domestic borrowing has continued to increase,” Caritas Zambia stated.
The civil society organisation further noted that fiscal discipline was going to be necessary if government was to bring down domestic borrowing which increases the burden of domestic debt.
Caritas Zambia further stated that the government needed to reduce their appetite for domestic borrowing as it tended to crowd out private sector investment.
“Private investment is essential for ensuring that there is not only economic growth but also sustainable development and poverty reduction,” the organisation stated.
Caritas Zambia noted that the private sector helps to increase the productive capacity of an economy, creates employment, brings innovation and new technologies, and boosts income growth.
“This can only be achieved if government reduces its domestic borrowing not increasing it or maintaining it at its high levels,” stated Caritas Zambia. “A reduction in domestic borrowing by government may contribute considerably to the reduction in interest rates.”
Labels: CARITAS, DOMESTIC DEBT, GDP
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Govt claim of middle income country status is insensitive – Kasanga
By Fridah Zinyama
Mon 18 Oct. 2010, 18:50 CAT
GOVERNMENT’S revelation that Zambia will soon become a middle income country are insensitive as 70 per cent of the country’s population still live in abject poverty, a local economist has charged.
John Kasanga said
it was surprising that finance minister Situmbeko Musokotwane told Parliament during the presentation of the 2011 budget that Zambia would in the next few years attain a middle income status when the country still ranked as one of the poorest countries in the world.
“Government should deal with the real issues of making the economy meaningful to its populous,” he said. “It’s not just a matter of saying that Zambia will become a middle income country...has the economy worked on reducing poverty for its people?”
And Kasanga said although the budget had a number of attractive fiscal features in it, it was overly dependent on Pay As You Earn (PAYE), adding that tax exemptions for constitutional office holders should be removed.
“Government’s over-dependence on PAYE is not good; it shows that government has failed to broaden the tax base,” he said. “I think that constitutional office holders should be made to pay tax also so that they contribute to the country’s coffers... Maybe it’s because they do not pay tax that they depend on it too much,” he said.
Kasanga further asked government to clearly explain whether the reduction in donor support was deliberate or not.
“Giving this explanation will help the public to understand whether Zambia is able to support most of its budget without much assistance from donors or not,” he said. “We are asking for an explanation because a reduction in donor support means government will have to find an alternative source of revenue...”
Kasanga further said ordinary people in business would be starved of finances if government sourced for the additional funds locally because the banking sector would concentrate on transacting with the government at the expense of the private sector.
“If the funds are to be sourced internationally, there are concerns of the public debt increasing,” he said.
Kasanga said the issue of the reduction in donor support would have to be explained to the public, as the implications on the economy were enormous. He further observed that government had made huge commitments to infrastructure development in next year’s budget.
“This move is not realistic as it will put too much pressure on government to source for funds to undertake these projects,” he observed. “This move also sends a message to the public that the infrastructure projects are meant to please the electorate next year.”
Kasanga said much as government intended to spend a lot of resources on infrastructure, the Mid Term Expenditure Framework did not include how government would maintain those structures after they were built.
“Is government going to train more doctors, nurses, teachers to meet increased demand in services once those structures are completed?” asked Kasanga.
Labels: 2011 BUDGET, DOMESTIC DEBT, JOHN KASANGA, MDGs, MINING, TAXATION
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Govt's planned $400m debt perturbs CCZ
By Fridah Zinyama
Thu 14 Oct. 2010, 16:00 CAT
THE Council of Churches in Zambia (CCZ) has expressed sadness at government’s intentions to borrow about US $400 million to finance programmes in next year’s budget, saying this might take the country back to being indebted.
And the Zambia Competition Commission (ZCC) has stated that the 2011 national budget will enhance competitiveness of the Zambian economy and reduce the cost of doing business through accelerating infrastructural development.
Commenting on the K20.5 trillion 2011 budget presented to parliament by finance minister Situmbeko Musokotwane, CCZ stated that the government’s intentions to borrow heavily in next year’s budget might take the country back to the pre-Jubilee debt cancellation campaign era where the country’s foreign debt had reached over US $7 billion.
“We therefore urge the MPs to compel the government to justify in clear measurable terms plans for such borrowings so that the country is not tied to a loan that we may not need and which may commit our children for generations to come,” the Council stated.
CCZ also called on Parliament to reconsider the proposals that the church and civil society had originally presented to the Mung’omba Constitution Review Commission on the need for parliament to scrutinise and approve all borrowings on behalf of the nation.
“We sadly note that even though in the budget speech, the Minister of Finance assures the nation that government places paramount priority in ensuring that public financial resources are used for the intended purposes, the government has proposed removing section 37 from the current Anti-corruption Commission (ACC) Act that protects public finance from abuse by thieving public officers,” CCZ stated. “We hope the MPs will seriously consider this as they debate the proposed amendments to the ACC Act.”
And CCZ stated that the absence of agreed government benchmarks and instruments in assessing the performance of the Zambian economy had for over the years created a problem for the church and other stakeholders in assessing the performance of the economy.
“For example the UN has their Human Development Index which contains benchmarks for measuring human growth and development in a nation,” the Council stated. “Our observations as Church leaders, therefore, are that even though the government has recorded a 6.4 percentage growth, this figure is difficult to quantify as we do not know how many Zambian families are now better off this time than they were last year. We also do not know how many quality jobs for Zambians were created by the economic activities that produced the reported growth in the economy.”
CCZ stated that the absence of government benchmarks to measure the performance of key economic sectors made it difficult for the country to measure whether the economy was achieving real social and economic development that could benefit the Zambian poor.
And the ZCC stated that government’s decision to prioritise resources in the 2011 budget on infrastructure development would undoubtedly have the likelihood of ensuring that Zambia remained competitive for trade and investment.
ZCC director for Consumer and Public Relations Brian Lingela stated that the investment in infrastructural development, particularly rural roads, would enhance connectivity to markets and thereby stimulating trade and investment in most rural areas whose potential have not been tapped for sometime due to poor road infrastructure.
Lingela noted that most rural roads had not been prioritized in the past leading to lack of business competitiveness in view of the high cost of doing business in such areas.
“When you look at the allocation for roads, rural roads have been prioritised and this will open up these areas for trade and investment and ensure that they also contribute effectively to the national economy particularly that the cost of doing business in those areas is likely to be reduced,” Lingela stated.
Compared to other southern African countries, one of the challenges that Zambia has continued to face in relation to business competitiveness especially in rural areas has been poor infrastructure.
The Commission further stated that there was need for a further reduction in bank interest rates to complement infrastructural development.
“It is the Commission’s view that despite the country sustaining improved macroeconomic performance over the past few years, bank lending rates still remain high,” stated Lingela.
Labels: 2011 BUDGET, CCZ, DOMESTIC DEBT, SITUMBEKO MUSOKOTWANE
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COMMENT - This is OUTRAGEOUS!!! They receive $100 million in taxes from the mines, and they borrow $140 million from the ADB??? I guess they put it on the public tab than no one will notice? Just let the people pay through a devalued Kwacha. No government that does not tax the mines to the fullest extent must resign in shame.
Daka explains $140 million ADB loan to pay farmers
By Kombe Chimpinde
Thu 16 Sep. 2010, 14:30 CAT
GOVERNMENT has said it was forced to borrow US $140 million from African Development Bank (ADB) towards payment for maize bought from farmers because local commercial banks could not immediately mobilize the funds.
Agriculture minister Peter Daka told Post Online in an interview following President Rupiah Banda’s revelation that government had borrowed to finance payment to farmers that farmers needed to be paid while commercial banks did not have sufficient funds to meet the payments.
“We are talking about a bumper harvest of 1.7 metric tonnes so I mean it’s only logical that we borrowed this money because it is not there in government coffers, it’s not budgeted for. You know K100 billion can only procure 40,000 metric tonnes. So really this bumper harvest is unprecedented,” Daka said.
But former finance Minister Ng'andu Magande has described the move by government as absurd and blamed the chaos in the maize marketing sector on lack of planning.
Magande, who is also an economist, told the Post Online that government has failed to properly handle the marketing of maize due to poor planning.
“Here is a bumper crop, what have you written today in The Post? Mazabuka, storage problems, Chipata, payment problems, Chief Chitimukulu, the whole market in problem. But for how long did we know that we were going to have a bumper harvest?” Magande asked.
“When I was an economist in agriculture, we used to do crop forecasts. By 30th of March, we knew what crop was on the market, and then we went to Kabwe Industrial Fabric (Kifco) to order empty grain bags. This is now the time, and people are still crying that they don’t have empty grain bags,” he said.
He said had there been adequate planning put in place by those in government, they would have simply walked into Barclays Bank branches in Kasama and borrowed money to pay farmers in Chitimukulu’s village.
“But instead, somebody has gone overseas to go and borrow foreign currency to come and pay the people in Chitimukulu’s village, how will you pay back that money. So it’s a big problem.”
Magande said it was shocking that government was going to borrow money from an external source instead of utilizing the commercial banks and the central bank.
“I am shocked! Government is now going to borrow almost K1trillion to go and buy maize in mukulaika to go and get maize from villagers. Where are the banks in Zambia ?” Why can’t they ask Bank of Zambia to let them use part of the reserves which they are saying have reached US $2 billion dollars,” he wondered.
“... part of that money came from International Monetary Fund IMF but someone is holding the money on Cairo road at Bank of Zambia saying our reserves are the highest and yet(president Banda) he is forced to borrow US $200 million dollars and I would like to know where they are borrowing this money.”
He observed that it was retrogressive for the country to say that the harvest was unprecedented when the government had a crop forecast survey department under Central Statistical Office.
But agriculture minister Peter Daka said that as far as he was concerned government needed to borrow money from outside the country for them to clear the unprecedented harvest of the country’s staple grain.
“You don't bake your own cake and eat it yourself. There are other people that should participate in the cycle so. There are so many Zambians that can export this maize to areas like Congo DR. Government has given a free will to everybody to get a an export license to export the produce. So the challenge is for everybody,” Daka said.
He said planning was not only on the part of government but also needed the participation of the private sector.
“Government works with the private sector, there are millers, there are traders associations, Zambia National Farmers Union. So really it’s not government to give the impetus, government has given a production formula which is the FISP(Farmer Input Support Programme) but you can’t ask government alone to buy all the maize that has been produced. The private sector must participate but not as low as K25,000 per 50 kg bag when the floor price is K65,000,” Daka said.
“We have borrowed 140 million dollars do you think our banks can give us that money. What government planned was K100 billion which could have procured 40,000 metric tonnes. But this production is unprecedented it has never happened before. You know its governments effort that is making sure that the production is increased from the levels that it has been by increasing number of people accessing fertilizer. If you look at the number of people that have accessed fertilizer from 250 to 550 to almost a million now.”
Last this weekend President Banda announced that government had borrowed US $140 million from abroad to enable government pay off the farmers who had supplied maize to FRA.
He made the announcement when he graced the Ukusefya pang'wena ceremony where the Bemba chief, Chitimukulu expressed concerns on the maize marketing problems affecting his subjects in Northern Province.
Labels: CORRUPTION, DOMESTIC DEBT, PETER DAKA
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Increase in domestic debt worries CSPR
By Fridah Zinyama CIVIL Society for Poverty Reduction (CSPR) ha
Wed 30 June 2010, 04:00 CAT
CIVIL Society for Poverty Reduction (CSPR) has expressed concern at the increase in domestic debt over the past four years. According to a report released by CSPR executive director Patrick Mucheleka, domestic borrowing has been on the increase since 2006.
“In 2006, domestic debt was 0.5 per cent of GDP, while in 2010 it went up to two per cent of GDP,” he said. “Also, as a percentage of revenue, domestic debt is on the increase and the current projections are at 8.9 per cent of the country’s total revenue.”
Mucheleka said the increase in domestic debt was of concern because of ripple effects it had on the economy in general.
“The fiscal management, interest rates and treasury bills are all going towards debt servicing,” he said. “This means that resources meant for social services to the poor and needy are diverted to servicing debt.”
Mucheleka encouraged the private sector to push government to honour her debt obligations and unite to discourage borrowing for consumption.
And African Forum and Network on Debt and Development (AFRODAD) executive director Collins Magalasi said since the global economic crisis, concessional lending and balance of payments had reduced.
He further observed that there had been a sharp decline in commodity prices whilst demand for government expenditure had increased, putting government under pressure.
“Government is forced to look to domestic resources for finances as it is accessible, cheaper, easier, and government has one hundred per cent control with no pressure to honour its debt obligations,” he added.
Magalasi urged the government to ensure debt sustainability, adding that some governments had gone down because of debt.
Meanwhile, CUTS-International acting centre coordinator Patrick Chengo has said there is need for Zambia to seriously take some of the Aid for Trade initiatives to those that aim at bringing a positive dimension in the way the country trades.
In a press statement, Chengo observed with dismay that the Enhanced Integrated Framework (EIF) in Zambia was dying out after the organisation’s efforts to bring the issues to the fore of both government and the public sector.
“It is saddening to learn about the non-existence of the National Implementation Unit (NIU) in the Ministry of Commerce Trade and Industry... 2009 was a good and positive year for the EIF in Zambia, as CUTS and the then existing NIU personnel had a vigorous capacity building campaign through a CUTS project dabbed EIF for Poverty Reduction funded by the Finnish Embassy. Nevertheless, CSOs will always be there to compliment on government positive efforts but there will always be a limit,” Chengo stated.
Chengo added that through the work of the NIU, CUTS-International expects Zambia to increase donor support for its trade development agenda and formulation of a National Trade and Export Development.
“This strategy will ultimately result in securing more funds for financing pro-poor activities and growth strategy targeting the areas identified as conducive to poverty reduction,” stated Chengo. “Therefore, realising it's non-operational, Zambia stands to lose out.”
And CUTS executive board member Ambassador Love Mtesa stated that trade could be a very useful tool in poverty reduction; hence the need for the government to ensure that institutional structures were in place in order to reap benefits from available aid.
Ambassador Mtesa further appealed to the Zambian government through the Ministry of Commerce, Trade and Industry to help ensure that the NIU was strengthened and in full operation without delay so that Zambia could quickly access different kinds of support from the EIF and Aid for Trade.
Labels: CSPR, DOMESTIC DEBT, PATRICK CHENGO, PATRICK MUCHELEKA
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C0MMENT - Why are farmers paid in IOU's? Why are they not paid cash on delivery? It is almost as if no one is allowed to have money in Zambia.
Pay farmers their dues, Bishop Lungu urges govt
By Christopher Miti in Chipata
Sun 16 May 2010, 03:40 CAT
CHIPATA Catholic Diocese Bishop George Lungu has urged the government to ensure that farmers are given their money as soon as they sell their produce.
In an interview in Chipata on Friday, Bishop Lungu, who is also Zambia Episcopal Conference (ZEC) president, said farmers needed money urgently to solve their problems.
“Government should ensure that farmers are given money in good time after selling their crops. It shouldn’t be after five or six months. Why, what is the problem? If they Food Reserve Agency buy their maize let them give the farmers their money as quickly as possible because they need the money,” Bishop Lungu said.
“Again that’s another challenge because you see after selling they have receipts that show that they have sold their maize to FRA but they don’t have the cash. They are not going to use that receipt to buy things from the market, they are not going to use that receipt for the school fees and so on. They need cash.”
He said if the government buys maize in good time but fails to pay on time, the whole marketing exercise becomes fussy. Bishop Lungu said the government should establish markets close to farmers.
“Government should ensure that markets are close to a farmer and they did not give a chance to a briefcase buyer to reach the farmer first because people are desperately in need of money. They need money for school fees, they need for paying at the hospital,” Bishop Lungu said.
Bishop Lungu said markets should also be accompanied by good road network.
And Eastern Province FRA coordinator Godfrey Munyoro said the satellite depots had been increased in most districts of the province.
“I think FRA and the government have heard the cries of the farmers, so the satellite depots have been increased from seven to 15 in the province, apart from Chama and Mambwe. In Mambwe, we never used to buy maize there but last season we started in two satellites. But for this season the satellites in Mambwe have been increased to three,” Munyoro.
“Then in Chama we had seven satellite depots, six of which were being managed by FRA, then the seventh one was managed on behalf of Chama District by
Isoka District that is Chibale. So basically from the six that were being managed by Chama have increased to ten but if you include Chibale then you are talking of eleven satellite depots,” he said.
Munyoro urged the farmers to ensure that the maize was fully dry before taking it for sale.
Labels: CORRUPTION, DOMESTIC DEBT, FARMERS, FRA, GEORGE LUNGU, MAIZE
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COMMENT - All government debt is paid by the Zambian taxpayer and consumer. When debt increases, the Zambian Kwacha depreciates relative to foreign currencies, meaning that the price of imported goods (captial goods, fuel) increases. So when the Zambian government chooses to borrow instead of tax the mines, they are cheating the Zambian consumer twice, by making them pay for what they should not be paying for in the first place.
Govt, Total incur $16.7m debt for importing crude oil
By Abigail Chaponda in Ndola
Sat 10 Apr. 2010, 04:00 CAT
INDENI Oil Refinery has revealed that
the Zambian government and Total incurred US $16.7 million about K78 billion debt for importing crude oil from a foreign country.
And Indeni refinery managing director Maybin Noole said if US $40 million was pumped into the refurbishment of the Bitumen plant that has been lying idle for the past five years, it would reduce on the importation of Bitumen by 60 per cent.
Addressing the parliamentary committee on government assurances chaired by Roan member of parliament Chishimba Kambwili at Indeni on Thursday, Noole said Indeni needed US $5 million to modernise its control system.
“When Total pulled out of Indeni last year, there was a debt of US $16.7 million, and the reason is that government was importing crude oil through TAZAMA and the cost of importing the crude oil was higher than the cost of selling,” Noole said. “We are unable to liquidate that debt for the next three years. And we also want to work on the refurbishing of the Bitumen plant because it has not been in operation for the past five years and we need US $4O million.
“And we want to modernise the instrumentation which is the control system. This project was parked when Total was there, it was not cancelled but just parked but we want to unpark it because it is a good project and it will make work easier for the plant and we need US $5 million.”
Noole said the plant was working well and it would run without any upsets through to September when it closes for maintenance works that would last for 45 days.
He said Indeni Oil Refinery had the expertise to run the refinery and meet national demand.
However, he said crude oil needed to be consistently available to meet this demand.
“The refinery has improved over the years. We as Indeni can improve but if the pipeline that the oil passes through is not well then we too can’t work well. So TAZAMA must also be looked at. We operate together and can’t do without each other,” Noole said. “What we need is recapitalisation and saving. We are able to meet national demand and we want government to give us a chance.”
And Kambwili said it was unfair for the new Indeni management to liquidate the US $16.7 million debt incurred by the Zambian government and Total.
He said the government should instead liquidate the debt.
He said he was impressed with Indeni Oil Refinery management and their role in the country’s economic development.
However, Kambwili cautioned management against unnecessary closures of the refinery.
“We are happy with the work that you are doing. But we don’t want to hear of unnecessary closures. We are going to support you and make sure that we lobby government to give you the necessary finances that you need for the plant. We are impressed that Zambians are running the plant,” said Kambwili.
Labels: DOMESTIC DEBT, INDENI
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Govt owes Eastern Province teachers K15bn – PEO
By Christopher Miti in Chipata
Thu 11 Feb. 2010, 04:00 CAT
EASTERN Province education officer Pilila Jere has said the ministry owes teachers in the province about K15 billion in unpaid outstanding allowances.
Featuring on a Breeze FM Budget Tracking programme on Tuesday, Jere commended teachers for being committed to work despite the outstanding allowances owed to them by the Ministry of Education.
“The strike that we had last year was not as a result of maladministration in the province, they were as a result of national issues. When you talk about rural hardship you are talking about issues that affect all teachers in the country, so Eastern Province was not spared,” Jere said.
“In terms of outstanding bills, the province has about K15 billion in form of outstanding bills and these are in different categories. We have leave terminal, leave travel benefits, long service salary arrears, excess leave and other allowances. Under leave, we have a total amount of K3.7 billion that is outstanding, leave travel we have K1.7 billion, long service bonus we have about K868.9 million, under salary arrears we have K4.4 billion, under excess leave K630 million and acting allowance we have K1.6 billion. So you can see that the bill is huge and most of our retired senior citizens are also badly affected.”
She said her office had received some money in the line of salary-related allowances that include leave travel, leave terminal, long service bonus and salary arrears.
Jere said her office had been allocated with K31 billion that would go towards outstanding bills.
Jere revealed that most retired teachers were affected by the outstanding debt, which resulted from insufficient funding to the ministry due to the global financial crisis experienced last year.
And senior planning officer at the provincial education office, Steven Zimba said the province had a lot of needs in infrastructure development like dilapidated structures, lack of staff accommodation and lack of furniture in schools.
Zimba said the ministry would need billions of kwacha to ensure that all the challenges affecting the ministry were addressed.
He revealed that the Ministry of Education in Chipata had been forced to cut down on the identified projects from 30 to about five due to inadequate funding.
However, Zimba said the Ministry of Education was thankful to the government for providing resources to the education sector.
Labels: DOMESTIC DEBT, EASTERN PROVINCE, PILILA JERE, TEACHERS
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Govt borrowing should help stimulate economy
By Fridah Zinyama
Sat 24 Oct. 2009, 04:00 CAT
ECONOMICS Association of Zambia (EAZ) has said government’s increased borrowing from the domestic market is justified provided that funds go into the development of infrastructure and other key sectors.
The private sector has expressed concern at government’s intended increased borrowing from the domestic market as the situation threatens to push up interest rates. In an interview, EAZ president Dr Mwilola Imakando said government’s intended borrowing from the domestic market should help to stimulate the country’s economy.
“I know that many players from the private sector have expressed concern over government’s decision, and they will be justified in their concern if government decides to spend the money on consumption and not investing into developmental projects,” he said.
Dr Imakando said government should also consider spending the borrowed funds on reducing the cost of doing business for the private sector.
“If government spends money in key sectors, there is going to be money flowing in the economy and the private sector will be able to participate positively,” said Dr Imakando.
In the 2010 national budget, finance minister Situmbeko Musokotwane revealed that government intended to limit domestic borrowing to 2.0 per cent of gross domestic product (GDP).
Dr Musokotwane said government’s increased borrowing from the domestic market was as a result of considerable reduction in its revenue base due to the effects of the global financial crisis.
But the Zambia Association of Manufacturers has said government’s borrowing from the local market would make it difficult for the industry to access funds from commercial banks, considering the high cost of doing business in the country.
ZAM outgoing president Dev Babbar said local manufacturers would find ways to survive the current economic hardships being faced in the country.
Labels: DOMESTIC DEBT
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Domestic debt relief strategy vital
Itayi Garande - Opinion
Mon, 28 Sep 2009 13:17:00 +0000
MINISTER of Finance Tendai Biti this week said that Zimbabwe should aim to have its debt to international financial institutions cancelled by seeking access to the Heavily Indebted Poor Countries (HIPC) initiative.
Minister of State in the Prime Minister's office, Gorden Moyo, said it would be immoral for Zimbabwe to pay off its debts to the International Monetary Fund, World Bank and African Development Bank when it could not pay teachers.
"We should be having conversations with the international financial institutions to get them to either reschedule our debt or to cancel our debt," he said, speaking at a meeting in London.
Moyo said that the IMF and World Bank had launched the HIPC initiative in 1996 to help countries unable to pay their debts. He added that the move would also give Zimbabwe access to the IMF's Poverty Reduction and Growth Facility, which provides loans to low-income countries at subsidised rates.
"We will get the resources and we will get the credit lines and we can stabilise our economy," he said.
The most glaring problem with the HIPC initiative for debt relief is that it will not provide lasting relief from debt for the highly indebted countries of the south, as Moyo and Biti suggest.
It is a six-year process aimed not at canceling debts, but at ensuring that they can be repaid. It has little to do with enhancing human development, reducing poverty, or even increasing economic growth in the debtor countries.
Rather, it is designed to massage debt figures down to a level where they would be deemed “sustainable” again according to the criteria of the IMF.
HIPC's definition of debt sustainability; the debt-to-export and debt-to-government-revenues criteria are arbitrary and too restrictive. By 1999, only four countries had received any debt relief under HIPC.
The six-year programme is too long and too inflexible to meet the individual needs of a country like Zimbabwe; reeling from the effects of sanctions and extended periods of drought and seeking to re-establish trade links with the rest of the world.
The IMF and the World Bank will not cancel any debt until the completion point, leaving Zimbabwe under the burden of its debt payments while it struggles to institute structural reforms.
The crucial question is: How will the structural reforms in Zimbabwe (conditions set under the HIPC initiative) be financed before debt cancellation?
IMF and WB conditions have historically undermined poverty-reduction efforts. For example, privatization of utilities tends to raise the cost of services beyond the people's ability to pay.
The programme is designed by creditors to protect creditor interests, leaving countries with unsustainable debt burdens even upon reaching the decision point.
The dependency increased by HIPC means that after debt relief the country will have got to a point where it needs more debt. Such a debt will need to be serviced again from meagre resources impacting heavily on investments in programmes that can reduce poverty.
This was the case in Zambia. The country fulfilled its side of the HIPC deal, implementing harsh structural reforms which brought down inflation, but it saw an increase in the poverty gap.
In Zambia, creditors had to extend relief substantially ("topping-up"), order to reach the sustainability thresholds established by the HIPC initiative. This increased the debt burden of the country and impacted heavily on poverty reduction programmes.
The IMF/WB did not seem prepared to deliver the necessary resources.
The Zambian government found itself under considerable pressure from other International Financial Institutions (IFIs), to finance its contractual debt service through expenditure cuts or via additional privatisations.
Notwithstanding the fundamental ambiguity of financing (current) expenditure via asset sales, Zambia's historical experiences with that approach have not been encouraging: wide gaps in rich and poor, increased indebtedness with other IFIs and creditors, expensive public provision and access, etc.
Zambia is the most vivid illustration of HIPC's flaws, but other countries have not done much better, even though their payments have fallen rather than the other way round.
Tanzania saw barely any reduction in repayments after qualifying, Mali received just a 13% cut, and Senegal nineteen percent.
On average, countries have been getting their annual payments reduced by just one third; whereas they could have achieved more poverty reduction with home-grown strategies.
Given these experiences, it would be foolhardy for the Zimbabwean government to join the HIPC process as an instrument to have its enormous debt brought down to a sustainable level.
Instead the country should develop its own debt relief strategy, which would need to include the following elements:
* Increasing the call for sanctions to be removed inorder for normal trading to resume;
* Declaration of an immediate moratorium on all its long-term debt;
* Declaration of the country's readiness to negotiate with all its creditors a realistic and sustainable debt service. To that end the Zimbabwean government by its own initiative invites all its creditors to a debt conference in Zimbabwe;
* The Zimbabwean government will undertake a broad based consultative process regarding the country's ability to service any debt in the future.
* The Zimbabwean government will seek political support for this initiative from individual creditor governments, which like for instance France, have supported the call for an international insolvency framework or for the full cancellation of debt; eventually this will be done in co-operation with civil society in these particular countries.
The biggest problem with HIPC status is that threshold levels to measure debt sustainability are arbitrary and still too high and sustainability is defined in economic terms and not in terms of human and social development.
In the case of Zambia, the failure to meet the HIPC Initiative conditions derailed the fight against poverty. The debt reduction on offer was too small abnd unjustifiable.
The “piling up” of different sets of conditionalities by the Bretton Woods twins slows down the process. Conditionalities such as the much-criticized Poverty Reduction Strategy Papers (PRSPs) do not succeed in aligning macro-economic issues and poverty issues more closely.
Macro-economic frameworks do not change significantly as a result of PRSPs.
In any case HIPC status is only granted after a country has shown that its debt is unsustainable. Zimbabwe has not reached this stage yet. The country has been under effective sanctions for almost a decade.
If the IMF and WB are concerned about "poor countries", the right decision would be an unconditional cancellation of all debts owed by these so-called HIPCs not this backdoor debt collection.
The World Bank has been criticized by Oxfam in a report, for having “used wildly optimistic growth projections for the 22 HIPC countries.”
The ramification of this as they continue is that because “projections are linked to growth, revenues have been overestimated, and debt is likely to absorb much larger shares of government revenue than World Bank projections state” meaning that in many cases nations will continue to spend more on debt than on basic education or health, even after receiving HIPC debt relief.
Issues of poverty reduction are important for any government and cannot be left entirely to the IMF/WB or to the international community.
Rather than seeking HIPC status, the Government’s expenditure patterns should be adequately altered in favour of poverty reduction programmes away from non-priority areas (e.g. purchases of automobiles).
The two ministers either have other (political) motives for seeking HIPC status or have no viable solution to the economic problems in the country; under the current sanctions regime.
Labels: DOMESTIC DEBT, GORDEN MOYO, TENDAI BITI
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Govt owes C/belt teachers K10bn
Written by Zumani Katasefa in Kitwe
Thursday, September 03, 2009 12:07:00 AM
GOVERNMENT owes teachers on the Copperbelt Province K10 billion in unpaid fixed band housing allowance, Secondary Schools Teachers Union of Zambia (SESTUZ) Copperbelt Province spokesperson Davis Chavula has said.
Chavula urged the government to address the problem of housing allowance arrears before teachers resorted to another work stoppage when schools reopen next week.
“Whenever teachers go on strike, the government does pay something just to mitigate the strike action, this trend is not good, strike actions in the teaching system disturb the learning calendar. It is time government addresses the issues of housing allowances before teachers resort to another work stoppage as we open schools next week,” he said.
Chavula said teachers on the Copperbelt Province were tired of asking the government for what rightly belonged to them.
“We are appealing to our capable Republican President Rupiah B. Banda to intervene in the issues of housing allowances and rural hardship in the Copperbelt for teachers,” he said.
Chavula said the issues of housing allowances had been a big problem for teachers especially on the Copperbelt Province.
“...the 2009 negotiations didn't address anything on housing allowances and rural hardship, and this has made most of our teachers to be frustrated,” he said.
Chavula also said it was the dream of SESTUZ to come up with one strong union to represent the teachers’ interests.
“It is our dream in future for the three unions namely SESTUZ, ZNUT and BETUZ to come up with one major union instead of our frustrated teachers to form another confused splinter briefcase union,” said Chavula.
And some teachers who spoke on condition of anonymity urged President Banda's government to show seriousness in handling national matters.
The teachers said they expected President Banda to attach great importance to issues such as education by way of paying teachers all that was due to them, such as allowances.
“Once teachers are not motivated, it will be impossible for them to perform to the expected standards, therefore Millennium Development Goals will be impossible to attain,” said the teachers.
Labels: COPPERBELT PROVINCE, DOMESTIC DEBT, TEACHERS
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Kunda, MMD protest against loan terms clause adoption
Written by Ernest Chanda and Katwishi Bwalya
Wednesday, May 20, 2009 11:40:27 PM
VICE-PRESIDENT George Kunda on Tuesday led fellow government and MMD members in protest against the NCC decision to adopt a clause in the Mung'omba draft constitution which compels government to disclose to the National Assembly terms and conditions of any loan they want to contract. This was after the majority of the National Constitutional Conference (NCC) members adopted the clause.
Article 312, Clause 3 (a) of the Mung'omba draft constitution states as follows: "That the terms and conditions of the loan shall be laid before the National Assembly and shall not come into operation unless they have been approved by a resolution of the National Assembly."
It was the third time in a week that the NCC had reached a stalemate on the matter.
As NCC chairperson Chifumu Banda announced that those in support of the clause were in the majority, Vice-President Kunda stood and beckoned other MMD and government officials to stand as they called for a division.
And the division was granted after about 126 people stood, including Vice-President Kunda. After Banda granted the division there was a round of applause and shouts of "ya, ya" from all those against the clause. At about 17:12 hours, Banda suspended the proceedings to facilitate for voting at 18:00 hours.
However, even after Banda promised to call for a vote at 18:00 hours, people were made to wait up until 20:15 hours when he adjourned the voting to Wednesday.
This attracted a sharp reaction from most of the delegates who complained that their time had been wasted. They said the NCC should have instead suspended the clause and debated other Articles from the Public Service Committee, which was next on the agenda.
Earlier during debates, foreign affairs minister Kabinga Pande proposed that the conference should either adopt the Mung'omba report in its entirety or take Clauses 1 and 2, then details be put in an Act of Parliament.
Pande's view was supported by Nchelenge National Democratic Front (NDF) member of parliament Ben Mwila who argued that contents in clause 2 sufficed what should be in the constitution. But Copperbelt UPND youth chairman Joe Kalusa argued that he did not want his children to suffer for debts whose conditions they did not know.
"As a youth I'm an interested party and I won't be intimidated by anyone. Ministers know that currently Zambia is the only country where money is borrowed without Parliament knowing. You can't borrow a loan without knowing the conditions," Kalusa argued.
"I don't want a loan which will say buy a mobile hospital first, or a hearse before contracting it. If we fail here let's take it to a referendum."
Mapatizya UPND member of parliament Ackson Sejani contended that the clause if maintained would instill accountability in the government.
"I stand firmly with those in support of the clause. What we emphasise is not separation of powers but accountability. When it comes to accountability, I have no compromise and I believe accountability is more important than the separation of powers," said Sejani.
"This clause cannot be left to the whims of those in power because they will either trash it or ignore it. Where are the Freedom of Information Bill and The Independent Broadcasting Authority Bill this government promised to take to Parliament? These are some of the lessons we should learn when we leave everything to those in power."
Labels: CHIFUMU BANDA, CONSTITUTION, DOMESTIC DEBT, GEORGE KUNDA, MMD, NCC, PROCUREMENT SYSTEMS
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COMMENT - Oh, oh ms. Siliya. There should be no parliamentary oversight of the debt incurred by the executive, because of... separation of powers? How about checks and balances? How about some oversight of your own dealings with RP Capital Management? It might have saved your job.
NCC delegates fail to reach compromise on clause regarding govt loans
Written by Ernest Chanda and Katwishi Bwalya
Sunday, May 17, 2009 3:58:57 PM
DELEGATES at the National Constitutional Conference (NCC) on Friday failed to reach a compromise on a clause that forbids the government from obtaining a loan without National Assembly approval on the terms and conditions.
Article 311 (3) of the NCC public finance committee which also correlates with the Mung'omba Draft Constitution states that, "The terms and conditions of the loan shall be laid before the National Assembly and shall not come into operation unless they have been approved by a resolution of the National Assembly."
Vice-President George Kunda argued that the provisions in the clause could be taken care of by a subordinate law. He was supported by Petauke Central member of parliament Dora Siliya who argued that borrowing was a function of the Executive.
"We cannot fight a monster by creating another monster just because we want to assume that Parliament will always be a saint. Borrowing is a function of the Executive. It is not practical that for each loan the Executive wants to borrow conditions must be laid on the table of the National Assembly, it is simply not practical!" Siliya said, amidst murmurs from some delegates.
And as Siliya debated, former Luena member of parliament Chrispin Sibeta shouted 'history!"
In response, Siliya who raised the tone of her voice to counter the murmuring from a number of delegates said she appreciated Sibeta's concerns because of his age.
"I appreciate what Mr Sibeta is saying because of his age. But it is important that we appreciate the separation of powers. Those who borrow are accountable to the people and it is Parliament that should make them accountable. But if those who should hold others accountable are part of the process, how are they going to provide accountability?" asked Siliya.
And Monze member of parliament Jack Mwiimbu defended the clause, saying it would give Parliament a role to play in the procurement of loans.
"... Currently, Parliament has no role to play in the procurement of loans. I would like to reiterate the position of the Mung'omba recommendation. This clause is innocent and applicable in so many countries. The Constitution of Ghana has similar provisions and they have no problems. It has been portrayed here that there is a scramble for loans, but are we saying that Ghana has failed to get loans? The answer is no," Mwiimbu said.
"If government want to borrow they have to come to Parliament, that's what we are saying. We are not saying that they will not have power to borrow. The current Executive consists of people who are members of parliament and they will have a chance to debate such issues in Parliament. There is no mischief being created by allowing this clause in our Constitution."
He was supported by Siavonga member of parliament Douglas Siakalima who argued that there was a lot of fear in those opposing the clause.
"The motivation to take this clause to a subordinate law is a fear by some people to transgress the Constitution. But in the past we have had people who have transgressed the Constitution. And if people cannot fear to transgress the Constitution, how can they respect a subordinate law?" asked Siakalima.
"I will give an example of a subordinate law, the current Electoral Act which provides for continuous voter registration but it has been transgressed. Perhaps if it was in the main law it could have been respected. I know that people are afraid of change. They are afraid of being against this clause because of history where people have not respected certain laws. Zambians should know the conditions to every loan so that even when we reach $11 billion debt they will know why they are paying."
Labels: CRISPIN SIBETA, DEBT, DOMESTIC DEBT, DORA SILIYA, GEORGE KUNDA, NCC
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Zambia risks falling into debt trap, says Hichilema
Written by Katwishi Bwalya
The Post, 6 February 2009
UPND president Hakainde Hichilema has said Zambia risks falling into a debt trap because of lack of a debt acquisition policy to control external borrowing.
During the newsmakers forum organised by the Press Freedom Committee (PFC) of The Post on Wednesday night themed 'Will this year's budget answer the economic challenges facing the country', Hichilema said the budget lacked clear guidelines on how poverty would be reduced in the country.
"We have once again embarked on an irresponsible borrowing and the problem is that we are using the money we are borrowing for consumption purpose instead of putting that money into productive ventures of the economy," Hichilema.
"We should borrow with knowledge and the capacity to pay back because this time around, no one will give this country relief because we are busy playing games when borrowing."
Hichilema said at the time of attaining the Highly Indebted Poor Countries (HIPC) completion point, the country managed to reduce its external debt to US$500 million.
"The external debt is now at US$2 billion, but the country should know that this time no one will give us relief because the whole world is faced with a global crisis and hence the need for debt acquisition policy," he said.
Hichilema said this year's budget was a clear sign of lack of leadership in the country. He said it was high time that Zambians started analysing their government on the way the economy was being run.
"The kwacha has been battered, it is losing value and if you don't know, the economy started doing badly after the general election when President Rupiah Banda was ushered into office and is a clear sign of a vote of no confidence on the way the economy is being run by this government," Hichilema said.
"I would have applauded the budget if it had addressed serious issues affecting people. For instance, the K700,000 tax threshold of [finance minister Dr Situmbeko] Musokotwane just means that you are sending six people to bed without food because a family of six will need K1.5 million per month."
Hichilema said the increment in electricity tariffs would now mean that more households would not afford to pay for electricity.
"Zesco spends 50 per cent of its operating income on its staff welfare and salary of workers when their friends in the region are only spending 30 per cent of the staff welfare and salaries. About 80 per cent of households in Zambia have no access to electricity and with the increment in the tariff, the number will likely increase to 85 per cent," Hichilema said.
He said the budget had no clear signal on how it intends to punish civil servants misusing public funds.
"There is nothing in the budget to send a clear signal to civil servants abusing public resources as brought out by the Auditor General's report, because even in the fight against corruption we have limited ourselves to the Chiluba era. What about after 2001? Let us stop being vindictive," said Hichilema.
"The problem is that they are first increasing their salaries and forgetting the civil servants and that is leading to increase in corruption. The first bill Rupiah Banda signed when he become President was to increase his salary."
Labels: DEBT, DOMESTIC DEBT, HAKAINDE HICHILEMA, PFC
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