FINANCE Minister Dr Situmbeko Musokotwane says the country had to go to the International Monetary Fund (IMF) because it had created its own problems in terms of unbearable debt contraction.
Speaking when a delegation of members of parliament and other officials from Tanzania paid a courtesy call on him, Thursday, Dr Musokotwane said Zambia’s economic situation had not been easy due to the excessive debt.
“As you are aware, the economic situation here has not been easy partly because we found ourselves in a situation where there is excessive debt. We used to have HIPC those days, we got out of debt but again we got back into debt. With the debt that has mounted, we ended up getting to the foreign exchange rate problems which led to inflation and of course less money in the budget for undertaking all sorts of things. So we have no option but to get up to institutions that help countries who have created problems for themselves, namely the IMF,” he said.
And Dr Musokotwane said government was expected to meet with creditors later this month to discuss the debt situation.
“The agreement with the IMF, the idea is for them really to be the go in between the creditors and ourselves, to see how we can rearrange the debt so that it is affordable. So that we are able to pay and at the same time it is affordable. We have made good progress on that. We had the first step in the agreement of the IMF when we got to what we call staff level agreement, now we are about to start the negotiations with the creditors, probably later this month. We will be engaging the creditors so that we can agree on which one is affordable on both sides,” he said.
“With this, we have also seen some progress, the exchange rate more or less has stabilized, it will go up and down more or less it has stabilized. The rate of inflation has also been coming down since we took over arrangements. Last year the rate of inflation was just under 24 percent, it has now come down to just 14 percent. So we are confident that the target that we had set [to] get back to single digit inflation by the end of the year will be achieved. So this is the way we are progressing.”
Dr Musokotwane said government had set up measures, through the Constituency Development Fund, to promote youth employment.
“But of course we all know that stabilizing the economy is not the end itself, the problem right now is youth unemployment. How can the youth that we have made to come on this earth, how will we give them livelihoods? So, that is the major challenge we are faced with. The way we are facing it, first of all, in the budget that we made last year, so previously the [CDF] amount was 80 to $90,000, we took the bold decision to increase that to now $1.2, $1.3 million. So it has been increased substantially, the purpose for doing so is to give the people in the communities themselves more say on their affairs,” he said.
“So with that enhanced CDF, what we have decided to do is that don’t come to the central government to say ‘I want a primary school there’, the money that you have, plan, budget, build the primary school, build the teachers houses, build the clinics, drill the boreholes, provide some money for emergencies like when the roof of classrooms blow up, it is your responsibility now that you have the money. We believe that this is a powerful way of empowering local communities to create business opportunities and to create jobs in their own community. So that is one route which we have taken to provide jobs and business opportunities for the remotest people in the country.”
He said there was need for the Tanzanian and Zambian governments to work together to revamp TAZARA.
“Of course we look forward to cooperating with you, something that started a long time ago during the days of Julius Nyerere and Kenneth Kaunda. TAZARA, let us work together to make it a better railway line. There is no reason why it shouldn’t be, I am talking about large quantities of copper that we expect to produce in the next few years, what is going to carry them to the ocean? It has to be TAZARA, so let us see how we can revamp it. Our people those days used to travel efficiently on TAZARA, now no one wants to travel on TAZARA because it takes days and days, they want buses. But buses and trucks are destroying our roads. So let us work together,” said Dr Musokotwane.
And Tanzania Public Accounts Committee (PAC) Chairperson Naghenjwa Kaboyoka said collaboration was needed in revamping TAZARA.
“We are delighted that you are talking of TAZARA and TAZAMA pipelines, we will save a lot of damage to our roads. You know it is one of the biggest projects of our forefathers Nyerere [and] Kaunda, it should be a memorable thing to really revive and keep the history. We are looking forward to continued relations in our two countries, especially our committees,” said Kaboyoka.