Sun, 24 Dec 2017 12:09:30 +0000
By CHARLES MUSONDA
THERE is nothing wrong with the nation borrowing but there is need to manage the debt levels in a sustainable manner, the Civil Society for Poverty Reduction (CSPR), has observed.
Recently, Minister of Finance Felix Mutati insisted that Zambia had no choice but to contract foreign debt to fight the country’s high poverty levels.
In an interview in Lusaka yesterday, CSPR executive director Patrick Shindano said debt was dangerous to poverty reduction if it was not well managed.
Mr. Shindano said debt took away social investment and Zambia was nearing debt distress because of the debt level which had hit 57 percent of the Gross Domestic Product (GDP).
“That is extremely high and debt repayment is accounting for 20 percent of the 2018 National Budget. The room that remains to invest in the social sector, in terms of resource envelope, becomes very minimal. Most social sector spending will receive lesser allocation because more priority is given to debt repayment as opposed to investing in key social services such as health, education, water and sanitation.
“Government cannot afford to default on debt repayment specifically in reference to commercial debt which we have incurred through the Euro bonds. One of the most critical things Government should look at when talking about poverty reduction is how to reduce the debt burden on people. That is basically spread out to every Zambian citizen and that is the debt that has to be paid by all Zambians,” Mr. Shindano said.
He said according to the current national debt level, every Zambian was highly indebted and there was need to ensure reduction of the debt level to less than 35 percent of the GDP.
“This is to ensure that we create sufficient fiscal room to invest in key essential services and programmes that will allow us to have safety nets…to ensure that essential services such as education, health, water and sanitation are well taken care of in terms of investment.
“Now we are grappling with the issue of cholera mainly because of lack of sufficient investment in the water and sanitation sector. If you look at drainage services, toilet facilities, especially in highly populated constituencies mostly in Lusaka, these services are almost non-existent. As long as we have high debt it will not be possible to do that. Poverty reduction and high debt do not go hand in hand.”
