Economist Lubinda Haabazoka says government’s over expenditure in the first half of 2018 is mainly due to unplanned projects which are of no economic value.
And Haabazoka insists that government does not need to borrow money from International Monetary Fund (IMF) to bailout the country from the current debt distress.
In an interview with News Diggers, Haabazoka said there were several unbudgeted for projected which resulted into overspending by government.
“I think that the budget performance this year has been average due to the fact that the minister has asked for a supplementary budget which is above five billion Kwacha. This basically shows that probably, the budget was not done properly or taken into consideration. We managed to over shoot our expenditure due to unplanned projects, or immediate expenditure. And the thing is that when you go for a budget variation, you need to ensure that the resources that you are going to get are not depending on debt,” he said.
“Its quite good that the Honourable minister of finance has mentioned that much of the resources are going to come from the donors and externally generated sources. And you can even know that ZRA ( Zambia Revenue Authority) has been collecting above projected targets because of increased tax on the economy. So probably government wants to use these resources for some more funds that they did not plan for. So looking at the increase in tax collection from ZRA and the reduction in the growth rate of the economy, that relationship does not sit very well because it shows that we are overburdening the already overburdened formal sector.”
And Haabazoka said the minister’s admission revelation that the country was currently in a debt distress vindicated economists whom had been warned government against borrowing.
“You cannot increase tax collection when an economy is struggling. I know people will say that there has been efficiency in terms of tax collection, I think the increase in tax collection is as a result of expanded taxes and also new taxes. But overall its quite good that the Honourable minister of finance has acknowledged that we have some fiscal problem. And that we need to contain our debts,” he noted.
“When we were advising government not to accumulate Eurobonds some six years ago, a lot of people thought we were against development. But I think we have been vindicated by the fact that now debt servicing is competing against a lot of social programs. What is quite encouraging is the fact that government has been able to meet its obligations in terms of salaries and also allocations to other private sectors. But we need to ensure that when we put austerity measures aimed at bringing back on course in terms of fiscal discipline and stability, we need to ensure that austerity measures do not hurt businesses. They don’t hurt the formal men. And that they also do not destabilise the economic development. I think that is very, very important.”
Meanwhile Haabazoka insisted that government does not need to borrow money from International Monetary Fund (IMF) to bailout the country from the current debt distress.
“I think even government itself knows that they do not need to get an IMF bailout package because the IMF package is going to hurt not only businesses but also the common person. This is because when you look at the IMF measures, they are so strict and compliance is demanded. And what will happen is that you are going to see that the Zambia economy is made worse off by austerity measures that are implemented by the IMF because for them, they will call for increased taxation, but there is no country that has ever taxed its way into development. Then they will also give up amounts believed to be about $1.3 billion which is pocket change to Zambia looking at the number of spending projects in the country. That is what, whether you like it or not, should be done,” said Haabazoka.
“And also, the true side of the Zambia economy is much more than the $19 billion of official figures because of having an informal economy. So $1.3 billion is pocket change to a country like Zambia. So my advice to the Zambia government is not to look at the IMF as a lender of the last resort. There are a lot of bilateral partners that are willing to help us where we need resources. But for a country to develop they look at comparative advantage and also where the resource potential lies. When you look at Zambia, that sector [for resource potential] is the mining industry. Lets go and mine the copper, sell abroad and develop this country. the infrastructure that you see in Zambian nowadays is very old. It was developed using proceeds from the mining industry. And today that will not change. That’s why God has given comparative advantage to any country. and even when you look at the economies, I do not see a civil servant paying so much money in terms of taxes because they depend on that.”