Three civil society organizations (CSOs) have advised the government to offload some nonessential assets whose proceeds can be used to pay off mounting debt.
And the CSOs have warned of deteriorating debt position if the government does not immediately come up with solutions to the debt ‘mountain’.
The three CSOs have further complained about the proposed revisions in the Constitution of Zambia (Amendment) Bill that seek to remove parliamentary oversight in debt contraction, saying that will reverse the gains made towards debt transparency.
These resolutions were made during a Public Dialogue hosted by the Consumer Unity and Trust Society (CUTS) in partnership with African Forum and Network on Debt and Development (AFRODAD) and the Civil Society for Poverty Reduction (CSPR).
According to a joint communiqué shared after the meeting, Friday, the organisations urged government to develop a legitimate refinancing strategy for its debt repayments.
“The Government needs to consider how to use its available resources to develop a legitimate refinancing strategy for its debt repayments, including the first Eurobond due in 2022. As part of this, Government could consider selling nonessential assets and use proceeds to pay down Eurobond debt,” the communiqué read.
“The Government should double down on its efforts to deliver fiscal consolidation. This includes reducing expenditure, particularly on large infrastructure projects and improving domestic resource mobilization. Harnessing the potential within the informal sector could also contribute to this as well as strengthen the fiscal contract requisite to hold the government to account.”
They have warned of a worsened debt position should the government fail to act on the current situation.
“The impact of debt is well documented: falling confidence, depreciating kwacha, all combined with the impact of the global slowdown. Without immediate action, the problem is set to worsen. As Zambia’s debt problem deteriorates, it threatens the economy which could lead to the reversal of decades of growth and poverty reduction. Broad representation from across various sectors agreed that there is a need for the Government to act soon before it is too late,” the communiqué read. “Comprehensive action is required to address liquidity constraints, improve investor confidence and promote stagnant private sector performance. It was recognized that the concern of rising debt is not specific to Zambia, but rather a regional concern. There is therefore an opportunity to make use of comparative tools, such as the Afrobarometer, to draw lessons from our neighbors.”
They have, however, called for increased political will for the country to be stirred in the right direction.
“Zambia’s economic situation has deteriorated in the last year and the window to reverse these trends is closing. As reflected by the meeting, all sectors of our society remain ready to support the government in its efforts to address the country’s debt situation. It was indeed highlighted, however, that it is now less an issue of technical expertise but rather political will that will be required to move the country in the right direction,” read the communiqué.
The CSOs further advised the government to enhance oversight on debt contraction.
“The Government needs to take early action to signal to investors. This means prioritizing the implementation of financial oversight reforms and increasing debt transparency and accountability. The proposed revisions in the Constitution to Zambia (Amendment) Bill that seek to remove parliamentary oversight threaten to reverse the gains that the country had been making in this direction. The Government should seek to engage the IMF, whose technical assistance and financial support could help to ease budget pressures, protect social spending and put the economy on a sustainable path,” the document read.
The organisations stated that despite some gains being made from the Public Debt Indaba held in November 2018, there was still need for more to be done to address the current debt challenge the country is facing.
“We call upon government to take the following steps: Communicate clearly on the issue of debt in Zambia and provide regular and detailed updates on the level of debt, recognize that the impact of Zambia’s debt is being felt by its citizens, build collaborative plans to tackle Zambia’s rising debt and continue to consult with stakeholders to build strong plans to support growth. While some progress has been made, stakeholders noted that the progress has been slow, and the country is beginning to feel the consequences. Failure to reduce the primary deficit, combined with rising interest payments, has required the Government to find additional revenue. It has done so through borrowing more, increasing taxes and charges and redirecting social spending. Now ordinary Zambians are bearing the brunt of the debt burden,” the communiqué further read.