A consortium of nine (09) civil society organizations have called on government to adopt tough actions to address the country’s debt situation whilst awaiting for a bailout package from the IMF.

In a joint statement, the Consumer Unity and Trust Society (CUTS); Civil Society for Poverty Reduction (CSPR); Non-governmental Gender Organisations Coordinating Committee (NGOCC); ActionAid Zambia (AAZ); Oxfam; Centre for Trade Policy and Development (CTPD); Jesuit Centre for Theological Reflection (JCTR); Caritas Transparency International Zambia (TIZ); Development Finance Associates (DFA); and the Alliance for Community Action (ACA) expressed concern at the struggling economy.

“We note with concern a seeming lack of substantial progress in agreeing on a support package given that discussions with the IMF on a bailout package are dependent on our debt reaching a sustainable level. With or without the IMF, however, tough action on debt cannot be avoided for much longer. Government needs to take urgent and deliberate action to put the economy back on track, starting with a restructuring of Zambia’s infrastructure projects, an improved public financial legislative framework and a revised and comprehensive plan to manage debt,” the CSOs stated.

“We are of the view that Zambia’s debt situation remains the primary cause of Zambia’s struggling economy. While indeed the effects of climate change on the energy and the agriculture sector have negatively affected growth this year, it is not the primary cause of Zambia’s economic situation. Over the past 10 years, Zambia’s debt has increased at untenable levels and as such we find ourselves in a situation of high risk of debt distress. Currently, our debt to GDP ratio stands at 78 percent and according to the IMF, this is projected to reach 92 percent by the end of the year. This level of debt has weakened the kwacha, constrained growth and limited government’s ability to respond to the external shock of climate change.”

They noted that citizens were increasingly experiencing a high cost of living driven by the weakening kwacha and high taxes.

“Due to Zambia’s high debt levels, ordinary citizens are increasingly experiencing a high cost of living, driven in part by the weakening kwacha, high fees and taxes, and reduced job opportunities, combined with low investor confidence, arrears and a high tax burden on business. Further, because of the debt, government’s spending on social sectors has been adversely affected negatively impacting citizen’s access to social services such as access to quality health and education. The reduced expenditure in the social sectors is without doubt adversely affecting the most vulnerable in our society, especially women and children,” the CSOs stated.

The CSOs further stated that government had not put taken sufficient measures to put the economy back on course.

“While Government has taken some steps including the release of quarterly updates by the Ministry of Finance, announcements of the proposed slowdown in contraction of infrastructure projects and the abandonment of the sales tax, the measures are currently insufficient to put the economy back on course, particularly given the recent indications of further borrowing for various infrastructure projects. Government needs to put in place long-term measures to generate confidence in Zambia’s economy which will have dividends in stabilising the kwacha, reducing the price of borrowing and providing a route to refinancing the country’s long-term debt obligations,”

They further stressed the need for political will to implement the austerity measures which were announced at the extraordinary cabinet meeting on Zambia’s economic challenges.

“In May this year, the President convened an extraordinary Cabinet meeting on Zambia’s economic challenges, which recognised the scale of the problem and made positive commitments to addressing debt. What it is required at this point, however, is the political will to implement the measures which will lead Zambia on the path of economic recovery, set debt on a downward path and reduce domestic arrears. With the Ministry of Finance’s plan to restructure the infrastructure project portfolio to be discussed at Cabinet, we urge government to demonstrate the necessary commitment to kick-start Zambia’s economic recovery and outline a key strategy with quantifiable milestones on how they intend to achieve this goal,” they added.

The CSOs emphasised the need stronger legislations of improving debt management.

“Zambia needs to firstly introduce legislation to improve debt management. This includes, revising the Loans and Guarantees Act and the Public Procurement Act, as well as enacting the Planning and Budgeting Bill. These pieces of legislation will increase accountability, transparency and budget integrity while curbing the mismanagement of public finances and reducing wastage. One major concern on the part of civil society is the proposed revision within the Constitution of Zambia (Amendment) Bill No. 10 of 2019 that seeks to remove parliamentary oversight on the contraction of debt. Debt transparency enables borrowers and lenders to effectively evaluate the sustainability of public debt and monitor emerging risks. Recent cases of hidden debt, notably Mozambique, demonstrate the adverse social, economic, and political consequences borrowers can face,” the CSOs stated.

They appealed to government to develop credible long term plans to manage the debt.

“Government needs to develop credible long-term plans to manage debt. This process starts with a revised Mid-Term Debt Strategy which addresses how government plans to manage upcoming debt repayments. It should be complemented by a refinancing strategy for Zambia’s Eurobonds to restore public confidence that government has the means to manage its debt in 2022 and beyond. This planning should be backed up not only by restructuring infrastructure spending, but by also by outlining quantifiable and measurable austerity measures to reduce the national budget percentage of the wage bill in order to protect productive and poverty-alleviating expenditure. In order to do this, there is need for deliberate measures to ring fence social sector budget allocations if the country has to achieve its plan to reduce poverty and vulnerability as outlined in Pillar 2 of the Seventh National Development Plan,” stated the CSOs.