Yohane Mbeeya Moono
Prior to the August 12 elections, the Patriotic Front led government was engaged in serious negotiations to have an economic bailout package from the International Monetary Fund. The then President Edgar Chagwa Lungu in November of 2020 launched the Economic Recovery Plan.
The Patriotic Front and the United Party for National Development governments have both something in agreement that the Brentwood Institutions offer loans at lower interest rates compared to the Eurobond Owners. Hence the continuation of the IMF bailout package programme spanning two regimes in a space of six months. Furthermore, the lower interest rates should not the basis to push debt repayment for the younger generation of this country. If the country is able to revamp her economy, then the debt should be paid off in the quickest possible time.
It is worthy noting that there is no faulting of either regime in the role in the IMF bailout package but that we have been architect of our own economic col de sac because Parliament failed to rise beyond Party Politics and put National Interest first in the debates.
According to the UPND led government, the debt level the country had contracted had reach unsustainable levels and that is why they continued with the IMF bailout package programme to give themselves relief and time to renegotiate the payment structure of the Eurobonds with the first due in 2022.
The UPND in opposition was a very vocal critic of the Patriotic Front led government on the debt management. And the fact that the UPND in government have accrued a debt for this country provides a sense of De Javu for the citizens. The citizens are fearing the worst because the UPND led government seems to have backtracked on their position while in opposition.
The UPND led government felt that the country needed debt relief in the payment structure of the accrued debts. To the government, the best was to seek this bailout package and refinance the already existing debt. The question is that does borrowing to service a debt make a right choice? Are borrowing for consumption or Production? This is the sense of De Javu cripping in the minds of the citizens.
A brief history of the debt in Zambia, between 2000 and 2005, the country was among the Highly Poor Countries. It took the efforts of then President Levy Patrick Mwanawasa for the country to be debt free. However from 2009 to 2021, the country has accrued debts amounting to over $14 Billion. Despite attaining the Lower Middle Income status in 2010 this is still not healthy for a country wish to grow her economy further. This means that much of the country’s earnings goes to debt servicing at the expense of social and economic development of the country. Education and Healthy are very important to the Nation but these sectors are going to be more meaningful to the Nation when the country is able to find her own Programmes in the critical sectors. The current Minister of Finance Honourable Situmbeko Musokotwane comes into the picture of having accrued some of the debt for the country between 2009 and 2021. The country will await eagerly on how the UPND led government will negotiate this course of action it has taken.
The Coronavirus Pandemic meant the fund giving countries such as Zambia the Special Drawing Rights to help revamp the economy from the recession brought by the pandemic. Zambia in August received $1.3 Billion for economic reconstruction from the fund. The Staff Level Agreement between the Zambian Government and the International Monetary Fund means that Zambia will get the bailout package she has been pushing for months. This is aimed at improving the socio-economic sectors of the country.
This bailout package comes with stringent measures such fiscal discipline and transparency in the disbursement of the funds. Promotion of the rule of law and protection of human rights among the measurements.
The fiscal discipline being preached as the bailout package should be the backbone of the country’s economic activities because we risk going back to get more debts. When we fail to utilize the bailout package properly we risk going back to get more debt. This is the fear that many citizens in the country harbour in their minds. Now the public is eager to see how the 3.5 Gross Domestic Product growth will be achieved with the country accruing more debt to service a debt.
For us to survive this nerve-wracking moments with the Brentwood Institutions, the country needs to improve the levels of production. The small and medium sized entrepreneurs are going to key economic drivers in a bid to improve our economy. The country needs to harness all the potentialities it harbours in all sectors and work on them to give the best economic outlook the country needs to have a healthy debt structure.
The country needs to use the resources at its disposal prudent to move away from the debt trap that has brought the sense of De Javu in the minds of the citizens. The only way to array the fears in the citizens is when the economy begins to be more functional and supportive to the productive sectors.