By Hjoe Moono
The revelations by the Ministry of Finance Permanent Secretary that the government is considering issuing another bond to pay off the already accrued debts is a clear sign of gross indiscipline in Zambia’s fiscal management. It is absurd that in just three years of the PF’s rule we are reduced to a nation that cannot sustain its external debt obligations and has to rely on more debts to pay debts.
We have stated before, and let it be stated again, that we have problems in our nation, economic problems, and that our economic problems were not visited on this country by some cruel act of God or forced onto us by nature. No. These are man-made problems created by the PF and imposed on us.
Biggest Mistake? Excessive Borrowing. Too much Nkongole!
Borrowing from one lender to pay off another does not solve any problem, it just indebts the future generation further, and at the rate we are going, we may soon become Highly Indebted and Poor Country again. We have stated here over and again that we cannot afford to continuously borrow with regard to ability to pay. It is now clear that all the Eurobond money has been used up and it has not generated any sufficient returns yet to sustain principal and interest payments on the debts.
The options that government has now is to fall into a vicious debt cycle by borrowing more to pay off previous debts—and thus sentencing the future to a debt trap—or default, or, as was the case before, begin to lobby for debt write-off. I find it shockingly absurd that the government would hope to get cheaper loans elsewhere when the recently issued $1 billion Eurobond was issued at an interest yield higher than the initial $750 of 2012. It is clear, that as a nation we are now viewed more risky to lend than before, and thus we now have to pay a higher price for any debt we contract. Consequently, we expect to accrue even more expensive loans as a country, and given the desperate situation we have been put in, thanks to the poor economic management approach of the past three years, the government would be willing to accrue these loans—and pass the burden to the future. Such recklessness in governance is indeed appalling!
A country until recently growing strongly and steadily with low debt levels, has u-turned into a country with a distorted economic future, high budget deficits and now escalating domestic and foreign debt. We all borrow. But no one would borrow without regard to responsibility of accountability and ability to pay. We cannot borrow from the rest of the world just so that we buy the things they produce, and when we fail to pay, we look elsewhere to borrow more. What was shared to the MPs by the Ministry of Finance PS is in effect an announcement to the world of the economic mess that the PF has put the nation in their three year existence, and that there is no other way but to continue borrowing. What a shame indeed!
Borrowing too much is the cause of Zambia’s problems, not the solution. The PF government has borrowed and continues to borrow too much money. Our leaders think you can borrow without regard to ability to pay, and spend carelessly without regard for the serious needs of the country, and all this done on the premise that more money will be made from ‘somewhere’, without telling you, my brothers and sisters, that it is you to pay for all this nkongole when they are long gone. At this pace, the PF may as well brace themselves for the prize of having created probably the worst debt crisis in our history since independence 50 years ago. And all this has been done in a space of just three years.
Let us all beware that nothing is more fatal for an economy as highly indebted as ours than further debt accumulation and corresponding rise in the fiscal deficit coupled with a volatile and depreciated exchange rate. Zambia’s fiscal credibility has been put to serious question, and this must be addressed.
Fiscal credibility is an important yet not some abstract concept: It keeps families going, it keeps children in school and allows then to aim and prepare for a good future. Fiscal stability keeps firms in business, and keeps people in their jobs. Our nation’s fiscal stability is heavily compromised.
Though we are yet to see what the new leader has to offer, we can all agree that we now live in an age and era of fiscal governance irresponsibility. Irresponsibility in government entails a lack of control of public finances, an excessive exposure of the country to external international money markets through the issuance of Eurobonds even in when the domestic currency is heavily depreciated, furthermore even when the ZRA has inadequate capacity to legitimately collect sufficient taxes to fuel governance and development programmes. This indeed, is gross irresponsibility on the part of governance, and the citizenry may do well to prepare for a pending disaster ahead of us.
Let us beware, that singing and melodically praising the PF’s populist rhetoric will not help our economy. We the Zambian people should demand of three things from the new PF leadership with regards the direction of our economy, these:
- Resolve: that they will deal with the debts and reshape our economy to live within our means.
- Determination: that we shall see clearly what government policy is in place to keep interest rates low, and get credit flowing and ability to pay back the huge acquired debt.
- Confidence: that there are real and tangible measures that will get the economy moving and create jobs, real and tangible jobs for the people.
In conclusion, we have all seen the consequences of excessive debts before, so let us continue to warn against such, and let us campaign against sentencing our future to a yoke of excessive debt and poverty. It is therefore our duty and responsibility to speak against gluttony and carelessness in governance matters that affect us all and demand for accountability and seriousness in economic governance.
The biggest problem is that there is a wreckless sense of entitlement as office bearers especially those making the decision to borrow the money. We believe we are supposed to be consuming money we have not earned because the next government will sort it out when the time comes.
Officers are not held accountable for their actions hence the lack of concern with the wreckless borrowing. How can a national debt become so inflated within a space of 3 years. The saddest part is that they use this debt to finance infrastructure projects which they use a campaign evidence to the poverty stricken electorate to give them votes so that they continue fattening their already fat stomachs. Little to the poor electorate know that this is borrowed money and they have to pay for it through higher…
As Lungu said during a campaign rally in Northern province “na mumona imisebo nomba, bulaya tefyo?” and the crowd was ignorantly eccsatatic with excitement, not knowing t his is borrowed money. He played tricks on poor ignorant people
Shame on you Kaminamisa Lungu
Go and tell the people in the villages and remote areas, that’s where the majority of the voters are. If Votes were based on literacy, PF would have been like the MMD of today.
As a Monetarist, I do not support any reckless debt contractions except justified ones that are need based. Therefore, on this raised issue i have to mine some data to establish the truth and intelligently remark. Irrespective of who is in power, Zambia comes first to some of us. As such, constructive criticism is meant for anyone. We postulate that the economic health of an economy can be best controlled by changes on monetary supply, or money, by a governing body that embraces smart planning and prudential leadership on national finances. I believe President Lungu with help of his fiscal and monetary advisory teams will realign his Government and institute effective controls with some Integrated Financial Management System in place asap.
PF is a perfectly very imperfect Party and have really ruined everything in JUST 3yrs whch took 8 yrs for Levy to build (the HIPC target). Its time we rise against ths inept leadership of PF, this hodge-podge way of doing things is disheatening to say the least ,today you hear Mwanakatwe stating this tomorrow Chikwata that . Wht no sense is this ba Zambia ? Are we curse or wht?
Zambia on auction sale to the highest bidder… but you have to give me my share of proceeds because i belong to Zambia.
People like Moono should state clearly that the economic/ financial problems Zambia is facing starts with the same dinasour who previously put us in debt trap under KK. Alexander Chikwanda is Zambia’s problem number one. And yet some months earlier Moono was praising ABC.
Can I hear that mantra again, “lekeni ba PF balebomba.” We used to shout out in the wilderness that these roads and new provinces you were singing praises about were based on borrowed money and when the time came to give it back, there would be no money available. Here we are, proposing to borrow again to finance the debts. One only does this when there is no money to service the previous debt. Can someone with an alternative explanation advance a counter argument?
One thing I have learnt is that no matter how informative the online news is,the majority who are the voters and are selling in the stinky ,filthy markets are not well informed.These have determined and sealed the coutyr’s fate due to tribal and regional voting.
Zambia is doomed under present circumstances.
Come 2016,the story will be the same.
We told you so. Can’t continue to rob Peter to pay Paul. The birds of debt have now come home to roost. This government has bankrupted the country and continues to send us into deeper oblivion. Brace ourselves by December people will feel the pains of this mismanagement. Wait until the long lines for basic necessities become the reality. All we can say is we told you so.
Yes!!! No more skimming off the top. I have a lot of faith in the system now because Lungu is a Lawyer. Good Ethics about Govt coffers have to start with the top. Hence, Zambians can rest assured that Lungu will put everyone in check. Viva ECL!!!!
Someone has to keep our Minister of Finance in check. He seems to be a very reckless & careless man. This is not the first time he is driving this country into serious debt. Think of all those sacrifices and hard work by some of our gallant men & women that went into dismantling our country’s debt. It is time we started subjecting some of these serious decisions to serious intellectual debates – not simple cadres’ talk. This man has to be stopped. EL must get someone from the modern generation like he did at BOZ otherwise the Minister will be a stumbling block.
Keep dreaming about your lawyer president. You seem to so easily ignore the fact that he is so compromised. Look at. The people he is associating himself with. RB, Fawaz etc.
Can you explain why RB suddenly jumped ship to campaign for Lungu?
In case you don’t have an answer, my Grade 2 son can help
Really @Ni-Ne, is this the same man who misappropriated clients funds when he ran a law firm? How many leopards have changed their spots in their life time. If only ECL had a disciplined Finance minister in the mould of Magande, then perhaps we would have some semblance of financial control.
Stop complainin iwe,we hav a workin gvmnt headed by 1 e.l
Ati Kwacha is going down azaza!!!! We told you so!!
No change will happen with Alexander Chikwanda in finance. The earlier Edgar Lungu discovers that Zambia needs a more risk savy finance minister, the better for us. I would recommend that Ms. Mwanakatwe be moved from Commerce to Finance.
Mr President,
Please relax the $300 000 threshold for us to get in as an investor.
I’m prepared to bring my entire savings, together with my Zambian wife and our 3 sons (all born in Zambia) and start a farming venture in rural Zambia. Apart from feeding the population, we hope to employ 10 adults throughout the year. We envisage holding open days to spread knowledge to the local people in our proposed area, to improve their agricultural practices.
This bottom up approach could help Zambia extricate itself from this cycle of international borrowing. Please, please listen to our plead.
But ba chikwanda was present all the time…he was busy calling others lunatics…….kwena…….we are in HIPC again…..
People be realistic, too much debtes. Why are we failing to tax zambian-ourselves-one MP, or Minister has more than 10-30 houses with an income of over K40,000 none of them is paying tax or if any less than 3%. We need a President and Finance Minister who can make bold decisons to start taxing locals both informal and formal. I see alot of opportunities for the GRZ to rise revenues locally, but because our leaders are selifish, no bold becisions. This is just a simple advise and logical advise if we are to move forward as a country. Developed countries have developed not because of borrowing but putting systems that make their revenue base strong from local taxes. 1 billion and 750 euro bonds, borrowed already, nothing to show that is completed—–ZR, roads, Zamtel-total losses.
Cry my beloved country!!!
Highly Indebted Poor Country. This means that we are a poor country but highly in debt. We get nkongole to clear nkongole. ECL must put measures in place to ensure that we clear the debts first before we even start looking at progressing in terms of development and welfare of Zambians. The bible clearly states that you can kongola but you must pay back. Otherwise you are doomed to live in shame. Checks and balances to be put in place. It is time when our country started making strides towards development. We have been down too long. Politics of appeasement must not be tolerated. We always want to appease our relatives, friends, people we know, or those who voted us into power while forgetting about the impact of the things we do on the economy and development of the nation.
MMD was good at those useless fiscal and monetary nonsense. They were voted out. Politics is a balance. people don’t appreciate those things. They want to see things happening. Roads open up areas to development. there is nothing wrong in borrowing and investing in opening up all areas to development. it will pay back. go and buy a plot in Mpika today. you will see how expensive it is now. thanx to the roads. there is no quick fix to underdevelopment. they journey there is long and uncertain. you need a visionary you can believe in to get you there.
Lungu is compromised! He knows that Chikwanda has failed just like Gondwe at BOZ failed but he is still keeping him why? They know each other well! It is you who is complaining but they are busy looking after each other at the expense of the nation! We would appreciate if Edgar can remember someone like Magande or Musokotwane to replace the dull Chikwanda at that sensitive ministry!
Parliament is so week and compromised
We should all rebuke and stop PF from tying the future of our children
How could you bring Mwanakatwe whose Husband Mupanga has ruined Zamtel back as Commerce Minister???
This is my free advice to the government. Instead of borrowing money to pay for the debt, you need to make bold and radical decisions such us;
1. Fire all the district commissioners and let the districts be managed by council heads. By so doing, you will have caused job losses for 106 people but the savings will help the 14 million. Avoid Political decisions
2. Close off the non-strategic missions and only remain with
those that are relevant to our economy. If Denmark, which
is better than Zambia economically can do that, what about us?
3. Reduce the number of deputy ministers and save more resources.
4. Set more realistic goals. i.e 3,000 km roads in 10 years instead of
8,000 in 5 years. If Angola with better GDP aims at 5,000 km in 8
years, what more…
A great piece of writing.