By BUUMBA CHIMBULU
GOVERNMENT’S credit worthiness will be enhanced following the new procurement procedure of awarding contracts to suppliers, according to the Financial Analyst, Naylor Kopakopa.
Mr Kopakopa explained that with prompt servicing of contracts by Government, its credit worthiness would greatly be improved and so shall the credit rating.
He indicated that factors mentioned above would be responsible for the rate at which the Government can borrow money.
He explained that with the new procurement procedure, the Government would not commit a down payment for a project it would not benefit from because of failure for a contractor to deliver due to lack of funds.
“The government will therefore not forgo the down payment; there will be no need to release the down payment for a project that is unlikely to benefit the citizens.
“The contractors will be required to be reasonable in their pricing as they will be certain that the payment for the contracts will be prompt, allowing government to save colossal amounts of money,” Mr Kopakopa said in his write-up on the change in the method of awarding of contracts.
He said the Government would not be forced to borrow to finance projects that are near completion, by this unnecessary accumulation of debt would be avoided.
Mr Kopakopa said the implication of this new procurement procedure to the suppliers is that they would not be enticed to commit their investment where payment time was not certain, this would minimise business failure.
“Their pricing shall entail that their margins are reduced which may look uneconomical but a good margin that takes a decade to be paid for is no better,” he indicated.
Mr Kopakopa pointed out that change in procurement procedure was long overdue and had it been implemented earlier, the national debt could have been lower.