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Govt must stop debt contraction, focus on repayment – HaabazokaBy Mirriam Chabala on 21 Feb 2018
Economist Lubinda Haabazoka says government should stop contracting more loans to finance developmental projects and focus on repaying the already existing debt.
And Dr Habazoka has insisted that Zambians should not cry over government’s decision to withdraw negotiations for a bailout from the International Monetary Fund (IMF) because it was also debt.
Commenting on State House press aide Amos Chanda’s statement that government had decided to get rid of middlemen when contracting loans from China, Dr Haabazoka advised government to slow down on loan acquisition.
“What we need to do instead of borrowing for development so that now we should cut down our expenditure so that we spend within our limits despite that we have an open door from the East to accumulate the debt. It’s not advisable now to borrow any money, let’s limit the amount of money we are contracting and ensure that we amortize the debt that is on our table. Obviously the IMF came with their own harsh conditions and that was going to subject Zambians to a lot of suffering and it was not going to go well with citizens because as people in higher offices definitely we are not going to be part of that. But I knew when the programme was failing that we were at loggerheads, we had serious issues, that’s why we did not get the programme approved but Zambians should not cry that we have not gotten IMF package because we are the same Zambians that were saying we should not borrow. So if you are against borrowing, then you should be against an IMF package, an IMF package is only good for Zambia because it forces government to have fiscal discipline,” Dr Haabazoka said.
“Well, first of all it’s government’s prerogative to choose from whom they borrow money. It’s quite obvious that the IMF has their own views and conditions in terms of instilling fiscal discipline that government was not able to follow. So the statement coming from State House to say they can not go to the end of the world means that they cannot bow down to the IMF conditions and basically this might be a signal to say this is the end of us courting the IMF for a loan. It is quite certain that the $1.3 billion that we wanted from the IMF was being pushed by the former Minister of Finance and he failed to acquire that. So the change of course also needs a person with different views and that’s why we have honourable [Margaret] Mwanakatwe there and the announcement that they will be borrowing direct from the Chinese banks basically shows that we are moving debt accumulation to another level and what I would just appeal to the stakeholders is that as much as we may want to borrow for economic purposes, let us know that at some point we will need to pay back the money and I am also of the same view that we do not need to borrow from the IMF because an IMF package is also debt. Whether it comes from the IMF or anywhere else, it’s also debt.”
Dr Habazoka said government’s decision to implement home grown policies such as getting rid of middlemen when contracting loans from China was the easiest way for the country to acquire money but that it was not a long term solution.
“Borrowing from Chinese banks is the easiest way, if the West is not giving money you should go to the East and the East gives money with no strings attached. However, in the long run it’s not sustainable because you would end up mortgaging your country. The fact that minister Mutati represented recovery through an IMF package and the way he was looking at the finances was such that for him our salvation was with the IMF and I am sure he has been replaced with someone who thinks that salvation is in the East. So let us also give it a time to see if the East will be helpful, the East will be helpful definitely but their conditions do not include fiscal discipline, they will just give you then you use your guarantee and if you borrow from Chinese banks and you fail to pay, they will follow COMESA law to recover their resources, that’s how they operate,” said Dr Habazoka.
About Mirriam Chabala
Mirriam Chabala is a Zambian journalist who covers current affairs and writes in-depth feature articles on social issues.
Email: mirriam [at] diggers [dot] news
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