ECONOMIST Dr Chrisphin Mphuka has advised the government to seriously lobby for debt relief from the international community.
And the the former Economics Association of Zambia president has called for the re-adjustment of the 2020 national budget to take into account the outbreak of Coronavirus.
The International Monetary Fund (IMF) has so far approved debt relief for 25 countries, among them Democratic Republic of Congo, Malawi and Mozambique.
In an interview, Dr Mphuka said the country was going through difficulties because of reduced revenues.
“It is not a given that businesses that are folding will come back after the pandemic is over because some may fold for good, unfortunately. I think that is why we have seen in rich countries, there is an effort to help these companies by giving them loans or giving some grants of some sort but with our government, I don’t think they have that sort of muscle though there is that initiative where there are saying Bank of Zambia will give out loans,” Dr Mphuka said. “It is a difficult time because government is facing reduced revenues because of lack of business so it is a double-edged pain and you know that our government had a problem before the Coronavirus in terms of the fiscal side, because of the high debt repayment so I think the key is to pursue vigorously the aspect of the international community or the lenders to try and give us some debt relief during this period. I think that will go a long way. The problem we have is that much of debt is public debt. Government has an option of seriously lobbying their lenders.”
He said it would be difficult for businesses that have closed to continue paying their employees because they were not making money.
“I heard the Minister of Labour (Joyce-Nonde Simukoko) some time back who was saying that those who have closed business, they should still continue paying their workers, that is a difficult one. We have seen the tourism sector has been hit hard and clearly, we don’t know if those workers can be paid and for how long. The situation keeps unfolding and so there is need for concerted efforts,” Dr Mphuka said.
He said the there was need to re-adjust the budget to help combat Coronavirus.
“The other thing that we really need to do is to re-work the budget for 2020. Already, the budget is out of track. I think there are certain expenditures that can be put on hold even within those other expenditures. But clearly, there will be savings from what is happening now, government workers are not travelling as much, they are not having meetings, all those savings need to be re-worked on the budget so that it is really targeted at revamping the economy and also trying to seriously put measures that will enable us to fight this disease effectively by expanding testing and putting in place sufficient health systems. I don’t know the extent to which this thing can be done without having parliament to sit and re-adjust the budget, but I think the budget needs to be re-adjusted,” Dr Mphuka said.
He further said giving out loans to small and medium scale entrepreneurs was not a tangible solution.
“The President mentioned a certain amount to give loans to SME’s (small and medium enterprises), giving loans will help these companies but some of the companies in the tourism sector, I don’t think it will be almost instant. Let’s be optimistic that this pandemic is over in six months. It is highly unlikely that people will start travelling instantly. It will be slow, meaning that these companies will be out of business for a long time so giving them relief loans may not be of help,” said Dr Mphuka. “What could have happened is to look at each sector and see how they have been impacted because there are others that have not been affected like others. So rather than giving a blanket statement of assistance, I think there is need to look at sectors and how they have been affected.”