9.5 C
Alba Iulia
Friday, May 7, 2021

Parliament approves an increase in Zambia’s foreign borrowing limit

Headlines Parliament approves an increase in Zambia's foreign borrowing limit

Members of Parliament
Members of Parliament

Parliament on Wednesday afternoon approved the increase of foreign borrowing limit from the MMD’s allowed (1998) K20 billion to K35 billion.

PF MPs assisted by MMD and UPND rebel MPs defeated opposition members of Parliament who tried hard to convince the PF government not to increase the foreign borrowing limit.

The Government circulated a motion to increase its borrowing from K20 to K35 billion.The budget for this year is K42 billion while borrowing if approved will be K35billion or US$7billion. This would bring the borrowing levels to the amount that the Movement for Multi Party Democracy (MMD) inherited from the UNIP Government,an amount which was only written off after the Highly Indebted programme spearhead by among others the Cardinal Mazombwe.

Sources at Parliament revealed that they were taken aback by the new motion which was circulated without prior consultation, as it would have been shot down if sufficient time had been given for debate outside the house where party discipline did not apply.

The Notice of Motion read as follows: Increase Amount Outstanding at Any One Time on External Loans: That, in terms of Section 3 of the Loans and Guarantees (Authorisation) Act, Chapter 366 of the Laws of Zambia, this House authorises the Minister of Finance to increase, by Statutory Instrument, the amount outstanding at any one time on external loans from twenty billion kwacha to thirty-five billion kwacha re-denominated currency.

This is a real danger for the country because all indications are that we are already highly indebted and any more money we borrow will be done at even higher interest rates thereby mortgaging the country in the future

 


During  the debate, Solwezi MP Lucky Mulusa, said it was strange that the Minister of Finance never spoke about such an important move during his budget policy statement. He said that it was strange that at the time when the IMF had ordered the government to drop food and fuel subsidies and ordered a freeze on salaries and employment, the government could suddenly undertake to increase the foreign borrowing limit. Hon. Mulusa said what would have been consistent with such intervention if the IMF meant well would have been further fiscal discipline measures and not indiscriminate borrowings that are not guided by a borrowing strategy nor a well thought through capital expenditure programme.

Mulusa explained that the only reason the IMF ordered withdrawal of subsidies and a freeze on wage increament and employment was to create fiscal headroom needed for an increased debt serving that would come with convincing Zambia to borrow more in order for the investors who are stuck with low borrowings from the emerging markets to acquire more borrowers. Mulusa explained that after the 2008 financial crisis mostly created by developed nations, there is more appetite to lend to resource based emerging economies rather than developed nations. With Zambia’s debt sitting at way below the allowed limits, the country has become a target for unsolicited debt offers and if this was not the case, IMF would have stopped the PF government just as it stopped subsidies and wage increments.

Others who debated against the motion were Former Finance minister Situmnbeko Musokotwane who cautioned the government never to go ahead as the arguments of favourable parameters would not hold water in reality.

MP Catherine Namugala cautioned the government that Zambia went through a lot to achieve the Highly Indebted Poor Countries (HPIC) status, which qualified the country for debt forgiveness.

Chipata MP Mutolo cautioned the government against reliance on the fallacy of parameters such as debt to GDP ratio because productive capacity needed to be achieved with the debt so acquired.

Mweengwa MP Haive Hamududu argued that the mere fact that the Eurobond proceeds have not been well applied and yet the government is already paying huge interest expenses shows that the country is headed for disaster. He added that the PF was a danger to the well being of Zambia.

All the debaters from the opposition benches raised concerns that make at the prospect of Parliament allowing the Minister of Finance to stretch foreign borrowing limit from K20 billion to K35 billion. They reminded the PF that Zambia just saved itself from a US $7 billion debt and but PF is taking the country several years backwards.

The numbers saw the motion going through 50 to 75.

In September finance deputy minister Keith Mukata told Parliament Zambia’s external debt under PF Government has grown by almost 90 % to reach $3.2 billion.

“This is a real danger for the country because all indications are that we are already highly indebted and any more money we borrow will be done at even higher interest rates thereby mortgaging the country in the future,” an MP moaned

Meanwhile Finance Minister Alexander Chikwanda introduced a motion on Ways and Means to amend the Value Added Tax Act, the Customs and Excise duty to match the changes made in the budget presented in October, 2013.

The changes would also see an increase in the cost of airtime in Zambia.Most opposition MPs including UPND Monze Central MP Jack Mwiimbu, UPND Kalabo MP Chinga Miyutu , MMD Mafinga MP Catherine Namugala and Dr.Chituwo all condemned the motion saying it would work against the poor majority in the country.

But Transport, Works, Supply and Communication Minister Yamfwa Mukanga supported the motion saying Government wanted to reduce the cost of doing business to increase investment in Zambia.

Source: [Daily Nation,ZWD,Times of Zambia]

64 COMMENTS

  1. According to Yamfwa Mukanga increase in tax on airtime will reduce the cost of doing business in Zambia? Wonders will never cease.

    • seriously dude i re-read that statement several times looking for a typo or maybe a hidden economic meaning but I only ended up getting a headache. “…Increase in airtime will reduce the cost of doing business in Zambia…’ Luapula Premier, Pio, Peter, Saulosi, Zambiano, my PF brethren, please, expound this statement and make me see sense, I beseech you.

    • Don’t complain, all governments will always borrow, you are a third world country, debt is the way forward

      Michael Sata is only doing what he should be doing, it is naive, immature, dull backwards to think they shouldn’t have approved this

      Thanks

    • Well said Mushota ! The problem is that the people are taking a political stand on this issue without understanding the economic equilibrium`s that are forcing our government to go in this direction.This is not about PF but about the forces in our economy.

    • This govt is interesting.
      Just like when you start using new mtDNA markers in an Epigenetic lab.
      We run out money for salaries and we have not even started a new budget. Borrow be the salary.
      Lab govt.

    • Borrowing is normal in an economy like ours. This will enable government to invest in the public sector. For example, building schools, hospitals, better roads. This investment can give a return on the investment which in the end will help boost the country’s productive capacity and increase economic growth. Weldone PF !!!

    • Well, they may borrow as they wish so that in the end IMF will say devalue your money for the second time. By the end of five years Zambian Kwacha will be tissue paper like in UNIP days when Zambia had a debt of $7billion.

      On the lighter side, if they are borrowing to kick start manufacturing then it is a wise move, other wise we will just end up with white elephants which will then be unaffordable to maintain like what Spain did.

      Spain borrowed massively and built new towns and roads which are at present white elephants.No one lives there, and no one uses the roads, but they will still have to pay the debt at manageable interest rates compared to Zambia which is potentially viewed as a political risk.

      I am worried about this!

    • Folks,

      To frank be with you 65% of this money will end up in top PF’s pockets.

      Anyway not to worry when time comes, we will crab all the assets of those prominent PF members to pay back the debt.

      I normally forgive people who make mistakes for the first time, but not the people who repeat the mistakes.We forgave KK because he made the mistake for the first time. But Sata and his family forest and associates will pay heavily if the money they are borrowing will leave the poor Zambians worse off.

    • honestly even if u have to be non partisan, u dont need to be a rock scientist to realise that the PF are taking us back to the UNIP days, HIPC. with the EURO bond what have the used the money for apart from bi elections. PF have failed to run this country period. soon our exchange rate will reach K10/ dollar.

    • Just borrow as much as you can….. how else will we ever move those Trams? It’s about time, if we wait for the time to afford financing our own projects, we will never arrive, I say Borrow……. paying will sort out itself!

    • Do you even know what $7bn debt means to a poor country like Z. In case you have forgotten, that is the debt level which kaunda couldnt sustain, and ultimately, that’s what brought him down. Should I also mention the hardships associated with that erra. You don’t wanna know

    • @Me…I know how large $7bn debt is, but what matters is how the money borrowed will be utilized.I can have problems if they want to use the same money on things like paying teachers and health workers improved salaries, but if that money can be used in ventures that give a tenfold more returns then i have no issues with it whatsoever.Some people have complained that this money will just end up being used to build roads,airports and universities ,quite alright these are infrastructures that won`t bring returns within a short time,but when you look at the long term investments this can go a wrong way because investors wants to be travelling on good roads,land at a good airport and not forgetting good health facilities.We can`t run away from this at this point in our economy.

    • KK funded liberation struggles in neighbouring countries as well as funding refugees in Zambia. That is the chunk which eventually led to HIPC status. Sata is borrowing to fund development which can eventually pay back when projects are managed profitably. Thats the difference.

    • Unfortunately, KK did not fund freedom fighters in neighbouring countries to the tune of $7bn. Those guys were practically funding themselves. Zambia just provided shelter and free bush for training. Z never bought significant arms or pay for logistics. Remember Soviet union was among many sponsors of the freedom fighters. If anything, Z was losing only from the damage she suffered from bombs, etc.
      Sata is not doing anything smarter than Kaunda did. There are better ways to fund development, and it is a well known fact that borrowings are not intended for infrastructure development. If this was the case, the pf would have proudly displayed their plans including how they will get return on those projects. Truth is that PF govt is broke and they don’t know what to do, so just borrow…

    • This is a welcome move.This will enable our government to finance profitable projects that could not be paid for out of the current income.The Lusaka international airport new terminal project is one of them.

    • I’d have kZambia’s debt crisis in the 1980s was caused by the dramatic fall in the price of copper. KK began to borrow heavily to finance developmental projects like agriculture infrastructure, establishment of textile industry etc just like Sata is doing now with the hope of creating a heaven on earth based in Zambia. By the 1990s because of the huge debt, the IMF and World Bank imposed conditionalities on Zambia and we all know the results.

      Depreciation of the kwacha
      Civil Service restructuring and downsizing from 144,000 Govt employees to 102,000
      Removal of subsidies on agriculture
      Cost sharing policies on user fees in health and education

      Fortunately, under Sata, we are already seeing these evils barely 2 years as President.

      ept quiet but the ignorance of people like you…

    • I would have kept quiet but the ignorance of people like Saulosi is really nerve wrecking. Zambia’s debt crisis in the 1980s was caused by the dramatic fall in the price of copper. KK began to borrow heavily to finance developmental projects like agriculture infrastructure, establishment of textile industry etc just like Sata is doing now with the hope of creating a heaven on earth based in Zambia. By the 1990s because of the huge debt, the IMF and World Bank imposed conditionalities on Zambia and we all know the results.

      Depreciation of the kwacha
      Civil Service restructuring and downsizing from 144,000 Govt employees to 102,000
      Removal of subsidies on agriculture
      Cost sharing policies on user fees in health and education

      Fortunately, under Sata, we are already seeing these evils…

    • @Sata’s Old Age Diaper…i think it is a little bit unfair to start judging Sata now(In 2 years are you kidding me ?!).No wonder a presidential term is five years.I will personally judge Sata after he finishes his first term mandate.Like i said it is not easy to see these things in the two years you have mentioned ,but trust me the returns in 10 years from now will be immense.And please don`t coampare what happned in the unip(Kaunda) days and now because it is different social and economic dynamics at play now even though copper continues to bring in the biggest chunk in our economy.

    • You PF faithfuls always talk as if you are the ones assigned to monitor permanent secretaries across Govt departments. We all know that borrowing is fine if “invested” wisely. So far the investment of the Eurobond is questionable with debts being paid while CEO’s prosecuted. We also know that curruption in Govts (this one included) is rife and that a sizeable chunk of this new borrowed money will end up in the pockets of a select few. Just look at the new “buss” industry (“im in construction”) in Zambia and you will understand what I’m saying. So what investment are you planning for? I hope it is not to bloat Govt expenditure on “fake promises” such as increased salaries, ministerial pay and allowances and the like because currently that’s where the biggest “growth” is.

  2. Zambians should responsible enough for the future generations.Why are we always picking the easier way out of the economic challenge.Change and real change from being economic dependent on the first world to in-dependence lies within the bounds of our country.Proper taxing,hard working(including implementation of brilliant ideas by our think tanks)and more importantly the revision of our education system to be problem solving based other than theoretical is the solution.This generation has to sacrifice and lay aside its extravagance trend just like political independence called on sacrifice.what is political freedom anyhow with economic dependence?

  3. The PF will definitely leave a memorable “mark” in the Economy of Zambia whether that “mark” will be positive or negative it is left to anybody to speculate. By the way speculation is for free. The beauty of democracy is that when there is a mess up the electorate can correct the mess by the “Donch kubeba”.

  4. Please can the civil society and opposition parties organise the protests and public debates to force government to reverse this law. We did it with third term ambitions for chiluba. We can do it now. It is not too late. Just apply pressure and this law can be repelled. We can’t afford to get to such debt levels. The team which got us there is back in govt- Sata, finance minister chikwanda, and kaunda. We need new leaders with 2013 thinking and reasoning. Please people help us organize this, it is critical.

  5. Most opposition MPs including UPND Monze Central MP Jack Mwiimbu, UPND Kalabo MP Chinga Miyutu , MMD Mafinga MP Catherine Namugala and Dr.Chituwo all condemned the motion saying it would work against the poor majority in the country.

    Unfortunately the ones being protected are not concerned, but blindly supporting every decision.

  6. Why borrow money to satisfy bloated egoes of massive infrastracture development and then leave the treasury bankrupt.Anyway,more money flowing around means more contracts and hence more money in thier pockets .What a circus!

  7. Ok but PF is destroying our economy. Very soon the government start having problems servicing these loans and it will be difficult for the country attract cheaper loans. Guess who will suffer? Mind you Ukwa and Chikwanda will not be there. all they are practicing is politics of the belly. They have no regard for posterity.

  8. Zambians should be responsible enough for the future generations.Why are we always picking the easier way out of economic challenges.Change and real change from being economically dependent on the first world to in-dependence lies within the bounds of our country.Proper taxing,hard working(including implementation of brilliant ideas by our think tanks)and more importantly the revision of our education system to be problem solving based other than theoretical is the solution.This generation has to sacrifice and lay aside its extravagance trend. Just like political independence called on sacrifice.what is political freedom anyhow with economic dependence?

  9. these dudes have now confirmed that the removal of subsidies was not from their assessment of what the economy needed to grow but kanshi was as a result of a directive from the IMF. What tuma PF supporters are failing to understand is that most of us are not against borrowing, borrowing has never stopped. The difference is that was sustainable borrowing earmarked for well-planned out projects. The economy was not in a nosedive. We were picking up slowly because a balance had been struck between ensuring the cost of living was at least affordable while at the same time roads and buildings were WIP. In this case, these dullards made outrageous unsustainable promises and if you are naive enough to think that the calibre of this govt will prudently use these funds, then am sorry for you.

  10. There is no problem in borrowing, however the problem is how you borrow, and how you spend the money. If you borrow to spend on monthly salaries of Civil servants, by elections, on social policies etc like it has been happening in the recent past, then that’s a cause for concern. Remember that all debt incurred by govt will eventually be paid by tax payers no matter what. If you are a young person and you live in Zambia be prepared for high taxes for most of your working life!

  11. WE HAVE PROBLEM WITH BEMBA PRESIDENT,THE SAME SYSTEM CHILUBA USED TO ABUSE THE ECONOMY,IS THE SAME SYSTEM SATA IS USING.BEMBA MAY BE GOOD SPEAKERS OR LIAR BUT BAD LEADERS,PLEASE LEARN FROM MWANAWASA OR BETTER STILL TRY MAGANDE IN THAT MINISTRY THINGS MAY WORK PLEASE MR SATA FORGET ABOUT YOUR TRIBALMENT MR CHIKWANMDA.

    • @Japan,don’t be tribal and lump all Bembas or Bemba speaking people under Chiluba’s,Sata’s or Chikwanda’s actions. You are just being tribal,failing to debate the issue at hand. Agreed, borrowing without a viable plan of investment to meet repayments is dangerous. Nothing tribal about this but to face facts.It is a matter for debate and PF did not vote alone in Parliament.

      By the way the achievements of Magande and Mwanawasa were just a culmination of over 15 years of Structural Adjustment Programmes (SAP) agreed btwn Chiluba’s regime,IMF and World Bank. It was well followed, with a lot if hardships for all Zambians,all then Finance Ministersadhered to it. So gratitude should go to all Zambians.Even investments for Kansashi and Lumwana started much earlier under FTJ,matured under…

  12. Please let us cut this biggoted tribal crap and debate rationally,why go tribal??We are all Zambians and hate going back to signing those HIPC jubilee papers for debt cancellation.It was so humilliating and the poverty was rampant. Please our elected leaders don’t take us back .We can live by our means and also borrow reasonably.

  13. 2.1 Who on earth has authorised you to use my sweet name? Though there is sence in your contribution it is wrong to use somebody’s name. Please change that name or add something. You even pretend to be my neighbour in USA when you are not.

    • I thought my name was original until you claimed you also existsted. Wish we could establish our digital ages, then we wouk know who registered first. In the meantime we can be digital namesakes or add 1 and 2 or something to the me name. We both leave the me free for the next person

    • Me has been my name for ages, now that you say we be name sakes and since i have also noticed that you are using small M meaning am older than you. Let us then keep the name as us. You me and ME Me.

      Now, since this name is a special name. let all our debates, contributions and thoughts be appreciated by any one reading our views.

      Thank you my name sake.

  14. I’d have kept quiet but the ignorance of people like Saulosi is really nerve wrecking. Zambia’s debt crisis in the 1980s was caused by the dramatic fall in the price of copper. KK began to borrow heavily to finance developmental projects like agriculture infrastructure, establishment of textile industry etc just like Sata is doing now with the hope of creating a heaven on earth based in Zambia. By the 1990s because of the huge debt, the IMF and World Bank imposed conditionalities on Zambia and we all know the results.

    Depreciation of the kwacha
    Civil Service restructuring and downsizing from 144,000 Govt employees to 102,000
    Removal of subsidies on agriculture
    Cost sharing policies on user fees in health and education

    Fortunately, under Sata, we are already seeing these evils

  15. simple economics really…more money in the economy, no matter how we get it, means more money in these politicians pockets. Most of these so called infrustructure projects will end as mere white elephants…..How much was budgeted for the resumption of our national railways? A project that, we all knew would fail even before it started; If, there was political will to see the railways succeed, GBM, fred mmembe, Goodward Mulubwa, would not have invested huge sums of money on Trucks!!!!!

  16. barely 2 years as President. The social cost of these measures was enormous. Hundreds of thousands of people lost their jobs and lives. poverty reached a staggering 80% of the population with fewer people affording even the most basic of services and the demise of rural infrastructure such as roads.

    By December 2000, the country’s debt totaled $7.3 billion and Zambia was barely able to make its payments on its burden. Millions of dollars were spend on debt servicing and was therefore not available to spend on developing the economy of a country where an estimated 60 of the population live under the poverty line, and where, with 15% of the population HIV positive, life expectancy has fallen to 40 years from 50 years.

  17. What do u expect from people who grew up collecting catapillars from trees and that’s the only main stay they know. By the time these thugs leave office, those who argue the negative direction Zambia has followed under the PF administration will be surprised with the consequences. Sometimes I get surprised with the huge growing number of dull and blind supporters of issues which will definitely have a severe and dangerous impact on the economy of the country in the near future. Kaunda tried it and where did the country end ? Bwafya sana.

  18. Investments are a good thing and a painful process to undertake hoping for better returns at the same time minimizing risks that comes with trap of excessive deb
    A balance between smoothing Receivables and payables between also the future and the now in Zambia’s economic activity avoiding the generation effects that comes with present consumption leaving non for future.
    Learning also to consolidate the Gov. positions in cash and reserves will serve much both in the shorterm and future avoiding being overleveraged and issues of redistributions that arises on the GRZ balance sheet
    Its like thinking about the velocity of money and the effect of multiplies and having a balance in fiscal and…

  19. Borrowing so as they can set up a pointless national airline, creating a costly problem that could have very easy have been avoided.

  20. The problem with socialists is that they eventually run out of other peoples money hence the need to borrow and borrow more. At this rate I wouldn’t be surprised if the same IMF bailed out the country due to gross economic mis-management by these socialists.

  21. You guys thought a guy who could only manage 7guns and a cressida is able to manage a multi billion economy to prosperity? What were you thinking?

  22. I remember the words of Kavindele just before elections in 2011. He said “nga mwa votela Sata tukabwelela ku bututu”. And this is exactly what is happening. We were very wrong to have put an insane (MAD) person in state house!

Comments are closed.

- Advertisement -
Loading...

Latest News

Government Planning to Extend the Number of Hours Allowed to Travel at Night for Public Service Vehicles

The government has said that it is looking at extending the number of hours allowed to travel at night...

More Articles In This Category

- Advertisement -