FINANCE and National Planning Minister Dr Situmbeko Musokotwane says he is happy that the new dawn government is making progress, having managed to control the country’s debt situation.
And Dr Musokotwane says although commodity prices are rising, they are increasing at a slower rate compared to the time the UPND took over office.
In an interview, Tuesday, Dr Musokotwane said his government had arrested the acquisition of new and expensive loans and was now able to spend more money on important sectors.
“You see before we got into office, the thing that was happening is that Zambia was desperately getting into a dangerous debt situation. You remember the numbers of what we owe were rising all the time, and it is because of that we were in a situation whereby the exchange rate of the Kwacha was getting out of control. You recall how quickly it was changing, all the time the exchange rate was moving. You recall also this external debt situation was responsible for the fact that a lot of necessary government expenditures could not be cared [for] including the fact that we had no teachers in schools. We were not able to hire teachers, we had no adequate medical personnel and could not hire because of money, medicines in hospitals were in short supply because there was no money. I know there is a complaint now about medicine but that’s for a different reason. All these were consequences of getting seriously in debt,” he said.
“Under the new dawn government, we have controlled the debt situation. So the issue of loaning every day and at night, expensive loans, that has been arrested and because of that, we are now able to spend more money to deal with important social issues such as hiring teachers, medical personnel, providing bursaries for children. And also importantly, create confidence in the economy because when a country is under heavy debt, those who want to come and invest to create jobs, of course, they become hesitant. Now that we have managed to control the debt situation, we will see soon that interest in getting investment in the country will begin to manifest itself. So personally I’m happy that we are making progress.”
And Dr Musokotwane said the pending IMF deal had also contributed to the slow rate at which commodity prices were now rising.
“If anything, our coming into the IMF programme has contributed to the slow down of the rate of prices because before then, the prices were rising faster than what they are doing today. So I don’t see how anyone can now say it is the IMF that has caused the prices to rise faster because, in the natural fact, prices are rising slower than before. I know prices are rising but they are rising much slower than they were the time we took over the office. When people say the cost of living is going up, we should narrow [it] down to the objective ways of measuring that. The objective way of measuring that is to use the data coming out of the central statistical agency and the measure they use is the rate for inflation,” he said.
“The rate of inflation measures the change in the prices month after month, compared to what they were the previous year. When this government took over, you recall that the rate of inflation was almost 24 percent in August last year. But you have seen and I think you have been following this yourself that month after month that rate of inflation is coming down.”
Dr Musokotwane added that the prices were rising at a slower rate compared to before the UPND government took office.
“So if we are to be objective, I would say that yes prices are rising but they are rising at the rate that is much smaller than they were when this government took over. So in short, inflation is being arrested and by the end of this year it will come down below 10 percent. Like what I said last time, some prices increase, some faster than others but when you look at the prices of all the commodities that consumers are consuming, it’s very clear that the rate of inflation is coming down. So this is what we promised and this is what is happening. But that does not mean that prices will be stagnant. All it means is that the rate at which prices will increase will be slower than what it was when we found it,” said Dr Musokotwane.