THE Civil Society for Poverty Reduction (CSPR) has called on government to create a sinking fund specifically meant for poverty reduction programmes to cushion vulnerable Zambians’ hardships.
In an interview, CSPR programmes manager Chimuka Nachibinga said the proposed fund would ensure that no money meant for social protection programmes was diverted to other sectors or functions, such as debt servicing.
He observed that the increase in the country’s budget deficit to K17.2 billion from K14.8 billion meant that funds allocated to social protection programmes would reduce and be diverted to debt servicing.
“What government needs to do is actually come up with the sovereign fund or sinking fund, specifically that is supposed to be channelled towards these important sectors that bring about economic development in the country. So, if we come up with a specific sinking fund, it means that we are trying to reinforce those economic sectors that we think can bring about economic growth and also the social sectors in the country, meaning that even if we have high levels of debt, government will be compelled to ensure that there is money, which is channelled to those sectors that have been reinforced as compared to how it is now. In terms of policies, we are hoping that as far as social protection is concerned, we are hoping that by the end of this year, we are going to have the Social Protection Bill passed so that it becomes an Act that will compel government to ensure that resources are safeguarded that are supposed to be channelled towards social protection programmes,” Nacibinga said.
“As we speak now, the proposed Bill is with the Ministry of Justice making headways to Cabinet. So, we are very hopeful that maybe that Bill goes through, then definitely, we will see social programmes being reinforced. As things are right now, I think the social protection programmes are mostly affected due to the fact that government, through the Ministry of Finance, is trying to rearrange the 2020 budget and most of those resources that have been gotten from other sectors, definitely, are being channelled to the health sector because of the adverse effects of COVID-19. Our recommendation is that despite the COVID-19 pandemic that has come in, we need to step up in terms of fighting the high levels of inequality in the country because, definitely, a number of people have fallen into poverty levels.”
He said that the increased budget deficit would also negatively affect several other sectors of the country’s economy and reduce disposable incomes.
“So, basically, the increased issues of budget deficit means that government needs to look for resources somewhere and that will mount pressure on debt accumulation, and if we add on to our debt, then, definitely, we are crowding out spending to other sectors when it comes to issues of debt payment. So, it means that we are actually putting more pressure on our economy when it comes to issues of liquidity. So, you find that with less liquidity in the economy, there are so many sectors that are affected. For example, one sector that is going to be affected is the small-scale industries that produce, locally-manufactured goods in terms of their production,” said Nachibinga.
“Secondly, in terms of demand for goods and services because people will not have disposable income; it will become difficult for them to be able to demand for goods and services. When it comes to allocation of resources budget-wise towards the social sectors, you will find that the social sectors will be highly affected because most of the resources will be channelled towards debt repayment. You will also find that sectors, such as education, social protection will definitely be affected. Generally, economic growth will be affected because much of the resources will be channelled into debt servicing compared to channelling them to economic pillars that may bring about economic growth in the country.”