NEWLY-APPOINTED Finance Minister Dr Situmbeko Musokotwane says he hopes the government will finalise negotiations with the IMF by October.
And Dr Musokotwane says despite the country’s economy being in a terrible condition, there are some positive things like the money which the IMF gave to its members and resources which the World Bank has indicated can be accessed which will surely help to put Zambia on the right path.
Meanwhile, Dr Musokotwane has asked the civil service to say goodbye to corruption because the current administration has a zero-tolerance policy.
Dr Musokotwane also says the UPND government would decide on whether or not to maintain Lazard as debt advisors after considering how valuable their contribution is.
At a media briefing shortly after being sworn into office, Friday, the Finance Minister said government would finalise negotiations with the IMF by October.
“It is true, I don’t have the numbers because I was outside but generally speaking everybody knows that the budget is under stress. It is under stress because unless we do something to the debt, then the budget is going to be the budget mainly for paying salaries and also servicing debt. The numbers that we were seeing last year showed that before you introduce borrowing or things like that, out of every Kwacha revenue, 90 ngwee or 90 percent was going to pay salaries and servicing the debt, leaving only 10 ngwee. So unless we do something about the debt, this is going to be the budget for paying salaries and servicing the debt. Obviously, that is meaningless. The answer is to talk to people we owe money, creditors, so that we pay at a slower pace, stretched over a longer period of time so that we release cash for us to be able to do something more meaningful in the budget. The process towards that is that the ones you owe money will ask you a question ‘if you want me to stretch the payment, what guarantee do you give me that if I give you that kind of relief, you will still be able to pay me’?” he said.
“The guarantee is that you must have somebody who is the referee, who is the authenticator to say ‘these chaps who are in office now, they are correcting the economic situation, they are building up the growth of the economy. There will be more money coming in the country, therefore, it makes sense to give them a relief to pay over a longer period of time’. That authenticator is the IMF and that’s why you have been hearing us talk so much about an IMF programme. It is important that we get an IMF programme so that we do the necessary form, convince the creditors that we are serious, and we will be able to pay back. We are determined that maybe October- November if possible even September, we should conclude the discussions because there have been discussions. We don’t know where the hitches are, we will learn now. September, October we should conclude the issue of the programme.”
And Dr Musokotwane said despite the country’s economy being in a terrible condition, there were some positive things like the money which the IMF gave to its members and resources which the World Bank had indicated could be accessed which would help to put Zambia on the right path.
“I think there are some things that are positive for us, the commissioner general was briefing me that the revenue inflows have improved. Obviously because of higher copper prices but also he tells me collection methods are better. We have also been told that the IMF due to this COVID problem, they are basically giving every member country US$1.3 billion and it has already come. So we want to examine the roles of the IMF and see how that money can be useful to us. So there are these positive elements that have come through. I think the World bank had a discussion the other day also. They say there is some money we can access quickly to put in the budget for next year. So a combination of the money from the IMF, money from the World bank, improved revenue from ZRA, I can almost guarantee that the stress on the citizens of Zambia will definitely be less next year,” he said.
“The exchange rate should move given all these factors. It should also move because there were some people who did not trust the management of their money in the previous government economy. They felt that as long as they left their money here, there was a risk that one-day things could blow up. But now their confidence is coming and they also know that the exchange rate is definitely going to appreciate. That’s why partly we see people bringing back dollars before they lose out because some have already lost out. Had they brought their dollars when the exchange rate was at K22, for every dollar they would obtain K22. What I can tell them is there is nothing to fear, this is a government that is going to be friendly to enterprise business.”
Meanwhile, Dr Musokotwane asked the civil service to say goodbye to corruption because the current administration had a zero tolerance policy.
“Wastage is to come to an end. As you see me here, I said 10 years ago when I was a private member of parliament, for me that was good training because when we talk about shortage of teachers, I have seen it. The primary school where I went before going to a secondary school in Livingstone, that primary school today is a basic school but the number of teachers who are there is less than the number of teachers who were there when it was only up to grade seven,” he said.
“That’s why you heard the President talking about taking back the money where it belongs. That is us here at the Ministry of Finance, no useless seminars, no useless trips because that money must be saved to go where the rural people are suffering. Issues of corruption, no one will protect you. If you are found involved in corruption, it is straight away to ACC, no one will protect you. So if there were schemes like that, say bye bye to them.”
When asked whether the UPND would maintain Lazard as debt advisors having heavily criticised the PF’s decision to retain their services while in the opposition, Dr Musokotwane said that could only be determined after making some assessments.
“We don’t come into office with vindictiveness. So members of staff should not feel that we are here to profile people to say this one yes, this one no, it all depends on merit. We will look at the situation, we said it (while in opposition) without total information. We will look at the situation, if our fears are confirmed then of course it takes a different route but if we feel there might be some value, who knows. So we will look at the situation, we will make a recommendation to the President then we will agree on the way forward,” he said.
Dr Musokotwane further stated that government would ensure it expanded mining production from the current 800,000 metric tonnes to about 2 million metric tonnes in a space of five years.
“We will push hard to ensure that our mining sector expands. The mining output has been stuck for the last 10 years with about 10,000-800,000 metric tonnes of copper per year. We are going to push aggressively so that mining output in the next 10 years comes to something like 2 million tonnes. By the end of this current mandate, we want to push the mining output to somewhere close to 2 million tonnes from 800,000. Why? Because mining as you know is the one that gives foreign exchange, it’s the one that gives some employment, it’s the one that provides employment to many sectors that are related to mining. So we are going to push very hard on the mining sector,” he said.
“The good thing is that the price of copper is projected to remain high for many many years, it is going to be the new oil. In the 1970’s, oil was the main thing. Now copper is the main thing because cars are no longer going to use petro, we are moving towards electrical systems. So we are going to push the production of copper by putting a good environment for more investment to be done. We will make sure there is value addition and pursue credible investors, to put investment into multi facility economic zones which have been dormant in the last 10 years.”
Dr Musokotwane said Zambia needed to begin to export more products to other countries.
“These juices we import from South Africa whether it is Mango juice, Orange juice, or Cocoa juice, we want to be the ones exporting those items into South Africa, into Europe, into America. So there is going to be aggression to make sure that we produce these items in large quantities, value and process within Zambia and export. This cotton, we will make sure that our farmers will get good incentives to grow cotton so that it is spun here, out of that we make cloth, out of that we are the ones exporting jeans, t-shirts, shirts, bedsheets and so forth. So this is just a brief of the agenda that we have to drive the economy to grow,” he said.
Dr Musokotwane noted that the Ministry of Finance he was joining was different from the one he left in 2011 in terms of the economic environment.
“The Ministry I’m coming to is quite different from the one I left in 2011 in terms of the economic environment that we are experiencing in the country today. The economic environment means that the cost of living has escalated beyond what we had imagined. Obviously, at the exchange rate where it is today or where it has reached, none of us ever dreamed that the dollar one day will cost K20 because the day it used to reach K5, K6, they would panic. Today that is the situation, the dollar has become very expensive. But all this clearly, in summary, is that the people of Zambia are stressing, economically the people of Zambia are stressing. I must also add that this economic stress has its roots here at the Ministry of Finance, the stress arises from the fact that over a short period of time we just borrowed too much,” he said.
“Borrowing too much money means that as we pay back, there is little liquidity to those running businesses to their customers. Meaning that it can become hard for the government to hire essential workers such as teachers, health workers or indeed even to provide meaningful salary increments to the workers of this public service. It is this stress that has led the people of Zambia more, especially the youths to say to our colleagues who were in charge before that ‘please go and take a rest, let’s try a different team’. Therefore, in this administration, we are going to focus a lot on economic issues.”
Meanwhile, Dr Musokotwane thanked President Hakainde Hichilema for the appointment, promising that he would not disappoint him or the Zambians.
“I am extremely delighted to be back at the Ministry of Finance. This is the fourth time I’m becoming a member of the team at the Ministry of Finance. The first time was when I just graduated from the University in 1979. I came back later as an advisor to Minister Katele Kalumba, then I was back as secretary to the treasury, I was back as Minister of Finance and I’m back as Minister of Finance. So I’m not totally lost. There are a few changes that have taken place physically and in terms of ideas but I have a very good understanding of this place because of the history I have indicated,” said Musokotwane
“I also want to thank the President, President Hichilema for showing confidence that I can come back to the Ministry of Finance to lead his economic team. All I can say is that I will not disappoint him and I will not disappoint the people of Zambia. We are here to do great things as an economic team under his administration.”