Alliance for Democracy and Development (ADD) president Charles Milupi says Zambia is an over-borrowed nation that lacks fiscal discipline.
And Milupi says it is disappointing that Minister of Finance Bwalya Ngan’du presented a K9.8 billion supplementary budget out of which K6.4 billion would be spent on external and domestic debt obligations.
In an interview, Milupi said the continued reactive approach taken by the PF is destroying the country’s image.
He said Zambia’s high corruption and debt levels had also made it difficult for the country to obtain a bailout package from the International Monetary Fund (IMF).
“We have been talking about the fact that we are an over borrowed nation, our debt to GDP ratio now is in excess of 70% unsustainable. We have been speaking right from when they started getting the Eurobond, starting from Mr Chikwanda, ‘no this is sustainable, no this is that’. In certain cases, he was calling us ‘lunatics’ and so on. But look at where we are right now! We can’t get money from the IMF because of two issues: corruption and the fact that we are an over borrowed nation, we lack fiscal discipline. I believe even the Chinese now are having second thoughts about lending us for infrastructure development because they are now worried about whether we shall be able to attain that. That is where they have driven us to, even when they were saying that ‘no this is sustainable, you know the opposition are bitter, they are jealous’. Look where they driven the country to!” Milupi said.
He said the most worrying situation was the huge allocation to debt servicing at the expense of social services sectors like education and health.
“We are now in a situation where this budget…the biggest single line item in the past used to be education followed by health [but] this time, the biggest at K24 billion is debt servicing followed by education at K13 billion, so about half the budget is debt servicing…because of that, with our failure now to get new loans, the budget is in trouble with seven months gone. The Minister of Finance has gone back to parliament with a supplementary budget. Because they continued borrowing even when we said don’t borrow, they continued to use the borrowed money on consumption instead of investing where we can get a return on investments to be able to pay back…The Zambian people are watching,” Milupi said.
He said the presentation of a supplementary budget, whose biggest chunk would be spent on debt repayment, was disappointing.
“In a total budget of K86 billion for 2019, the amount they are asking for is about 12%, it is a huge amount for a supplementary budget and what do they want that supplementary budget for? Debt servicing. Most of that is debt servicing. It means now that even to pay debt, we don’t have the money. So you are going to parliament to ask for this [money]. I am told…it is also to fund our missions abroad. Funding of missions was in the original budget, so what has happened? It means that they are in severe problems. But even if the Minister goes to parliament for this supplementary budget, I am asking him on the revenue side, where is he going to get this extra money? He can’t borrow because people don’t want to give us money, they have depleted reserves, they can’t get it from reserves so where are they going to get it? There is only one answer – back to the Zambians through higher and higher taxes…It is the Zambians who have to pay,” said Milupi.