The opposition yesterday won a motion that compels government and the minister of Finance to seek authorization from parliament before any external and internal debts are contracted.
The motion when implemented would compel government seek authorization from parliament before any external and internal loans are contracted.
Mover of the motion MMD’s Chipangali Lawmaker Vincent Mwale told parliament that the motion if implemented would curb and restrain borrowings.
Mwale said that the rate at which the Patriotic Front (PF) government is borrowing was recklessly and a source of concern, and if not stopped or regulated the country would slip into serious indebtedness.
Mwale who is also Parliamentary Accounts Committee (PAC) chairperson said that for the two years the PF has been in government they have borrowed over 3.3 billion dollars compared to the last five years of the MMD in power, whose debt was around 1.9 billion dollars.
“From 2006 to 2011 the level of public external debts has risen from 172 million to 1.9 billion dollars, this was the MMD time and this gives a per cent increase of 95 per cent in a period of five years. If we compare this to the increase in the two years of the Patriotic Front in power the signs are worrying Mr. Speaker. The stock of government debt stood at 3.3 billion dollars as at the end of September 31, 2013. This represents an increase of 65 per cent in just two years Mr. Speaker. At the rate we are going Mr. Speaker Sir and applying some simple mathematics in the next three years we might see our country increase its debt by over 160 per cent from where we left it in 2006 at 1.9 billion,” said Mwale.
Mwale warned that if Zambians were not careful and stop the careless and baseless borrowing by the PF, by the time they finish their five year tenure in office, they would be able to accumulate over 500 billion dollars in external debts.
He said that Zambians were not asking too much from the PF government but consultation before they make any contraction of external debts which were also a security concern for a country.
Mwale also observed that the current legal frame work or laws that governs debt contraction were verge and unhelpful for Zambia as they gave too much power to government and the Minister of Finance to make any borrowings as long as they deemed such borrowing desirable.
“If we are not careful and we do not persuade the PF government to reduce its speed of external borrowing our country will be caused over 500 billion dollars by the end of 2016. This is why I have obliged to utilize my moral national duty to bring this motion to parliament. Mr. Speaker I am not asking for too much from government by requesting this house to be consulting us when they are contracting foreign or external debt, what they need to do is to bring to parliament amendments to parliament on loans and guarantees authorization act cap 366 of the laws of Zambia. This act gives a bracket authority to government to borrow.
Section 3 of the act it gives the ministry of finance a general power to borrow both within and outside the country as he may deem desirable, Sir granting power to one individual to commit the country to high levels of indebtedness is not progressive at all,” he said.
He said that there was no way absolute powers on the contraction of loans should be left in an individuals’ hands, “Even when I know that our Finance Minister is a gentleman, but granting these powers to one individual is not progressive and I feel t hat we should be consulted as representatives’ of the people authorizing the minister by resolution of this house to issue a relevant statutory instrument is not enough. Sir there is need to strengthen parliamentary oversight function regarding debt contraction. Parliament should by law be allowed to give guide on what should be borrowed in a specific period of time and the minister of finance should be obliged to plan his Budget within these limits.”
Mwale said that the role of parliament in debt contraction should not be underplayed by government because external debt was a national security issue.
He explained that when national debt per capital increases the likelihood by government defaulting on its debt service obligation increases and as a risk of a country risking defaulting on its debt service obligation would also increases, adding that the country would in the end loss its social, economic and political power to bargain on any issues of national security.
“This in turn makes a national debt level a national security issue, Sir the provisions in the current constitution with regards to foreign debts are inadequate, article 120 on public debts provides for charges. The article on the charges does not provide guidance on what the minister should follow on the charges, the piece of legislation that provides guidance, this act provides and gives procedure to the finance minister on negotiation during the contraction of debt but this law is inadequate,” said Mwale.
The motion was seconded and debated by UPND Choma Central MP Cornelius Mweetwa and MMD’s Solwezi Central Luck Mulusa among others.