An influential social and economic lobby group on Friday urged lawmakers in Zambia to reject plans by the government to borrow more money to fill a financial gap caused by reduced revenue from copper and unbudgeted for expenditures.
On Wednesday, Finance Minister Alexander Chikwanda said he will seek parliamentary approval to increase the overseas debt ceiling to 60 billion Zambian Kwacha(aboutt 8.2 billion U.S. dollars)from the current 35 billion Kwach (about 4.8 billion U.S. dollars).
But the Jesuit Center for Theological Reflections (JCTR) said it was dismayed by the financial gaps and deficit recorded in the 2015 budget and wondered why the government only wanted to resort to borrowing to fill the gap.
“While we appreciate the minister of finance’s right to increase the debt ceiling in accordance with the provisions of the Loans and Guarantees (Authorization) Act Cap 366 of the Laws of Zambia, we disagree with his request for an upward adjustment of the ceiling,” the organization said in a statement.
“We dismiss the minister’s rational for additional debt contraction to address the fiscal deficit. His argument that Zambia’s public debt currently standing at 29 percent of Gross Domestic Product (GDP) is still sustainable and therefore warrants room for further debt contraction should not be entertained by parliament,” it added.
According to the statement, Zambia’s public debt as a share of domestic revenues has already reached the critical threshold of 15- 20 percent beyond which austerity measures will have to be undertaken, adding that additional debt contraction will adversely affect social sector spending because of the size of the country’s economy.
“As JCTR, we state that Zambia should not embark on reckless additional debt contraction. The nation cannot borrow its way out of its development challenges at every instance. We therefore appeal to parliament not to heed to the dictates of the executive on further debt contraction,” it added.
The lobby group said if parliament approves the executive’s mid- year budget proposal on increasing the debt ceiling, the country will pay a high price in terms of further social and economic polarization which will include diminished investor confidence and higher future taxes. Enditem