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.