There was unnecessary drama, some misdirection, in the House on Thursday 25th February, 2016 on the occasion of the Motion to raise the ceilings on both internal and external borrowings and guarantees to enable the government to have the necessary leeway to seek recourse to facilities to bridge the resource gaps necessitated by development imperatives.
The motion was debated with expected and legitimate passion and in the process some misplaced political overtones were infused in the debate which made it binding for the government side to reply in an equally robust manner. This irked sensibilities on the other side of the divide.
National debt in any country cannot be a matter of indifference and efforts or even crusades by segments of the population that feel an inescapable duty not to encumber or lumber posterity with unsustainable debt burdens should not be dismissed lightly or with scorn.
Zambia, a decade ago, escaped the debt trap by going through a rigorous programme under the supervision of the International Monetary Fund to accumulate Special Drawing Rights to service part of its debt. The balance was taken care of by write-offs from the developed countries. The debt overhang and the rescue mounted by the international donor community has remained firmly implanted in the national psyche.
However there is compelling need to contextualize things. At the time of the Highly Indebted Poor Countries (HIPC) relief in 2005 the Gross Domestic Product (GDP) of Zambia was US$6 billion against the external debt of US $7 billion far beyond 100% of GDP.
The current situation is that the external debt, excluding those debt contractions that are in the offing, is just over 38% of GDP – much lower if the World Bank computation of Zambia’s GDP in the World Development Indicators of 2015 at US$26 billion is used. This favourable or reasonable external debt situation does not negate overall concerns about external debt because annual debt servicing is quite a stiff requirement especially when adverse movements in the exchange rate are factored into the equation.
All countries in the world have internal and external debts. For countries like Japan with a national debt of approximately 240% of the GDP, debt may not be a preoccupation because the bulk of the debt is internal and can therefore be rolled over eternally.
The turbulences and headwinds on the global economic front call for circumspection and assurance that internal growth prospects will facilitate external debt service.
For Zambia the budget deficits are not only a result of inadequate revenue inflows, but also the need for quicker development pace against the backdrop of huge development arrears. There is no alternative to rational borrowing, both internally and externally.
The discussion should centre on the use of borrowed money particularly on whether the money is on growth promoting projects which enhance our productive capacities and hence sustainable means and ability to service debt obligations which have time sensitivity and immutable time frames.
The Patriotic Front administration has used the borrowed money to accelerate the country’s development process by investment in infrastructure and other growth sectors that have not received adequate attention in much of the post- independence era.
After HIPC, the government generated growth rates averaging 6% to create a development momentum which has gathered pace in the last four years of PF administration. Because of backlogs of development arrears, the impact will take long to show on account of inevitable time lag effects but it is an indisputable fact that development is more widely spread now.
Deceleration in the global economy particularly as manifested in the low commodity prices has sent shocks in all fragile emerging economies and we all have to brace for tougher times until we adjust and re-energise our economies to absorb shocks by utilizing the diverse endowments that confer a range of comparative advantages like solar, thermal and hydro power in the energy sector. Investment in irrigation will not only ameliorate yields because water is controlled and the crops are grown when there is less proliferation of insects, but circumvention of seasonality of agriculture can be profoundly salutary.
The world growth prospects do not look exceedingly cheerful and the prognosis may be gloomy for quite a while. Western countries led by America have tried to stimulate economies by all kinds of methods that include the quantitative easing (QE) – the purchasing of government bonds by central banks to facilitate new bonds. This sophisticated way or euphemy for printing money, has run into hitches because zero or near zero interest rates impair the liquidity of banks and limits central bank monetary options when the interest rates are already near zero point.
In the scheme of things, many western experts have pined hope on China to add impetus to the global growth momentum through consumer driven demand.
The scenario makes a presumption on average Chinese buying power.
The sluggish growth in the Euro zone slows global growth very significantly. Western Europe, the size of the Congo Democratic Republic has a bigger GDP than USA.
That small area of the world has 6% of the World Population but accounts for slightly more than 30% of World trade.
Africa has the youngest population which if equipped could yield beneficial demographic dividends. Regrettably we have no resources and requisite social organization to invest in turning our young population into a productive resource. These are the challenges that should preoccupy us and demand our concentration of energy.
Now the episode in Parliament. The Hansard will show no offensive language was used nor was any grouping in the country singled out.
In response to the assertions by members of a party that the Patriotic Front would be routed, I suggested that a Party which some members belonged to would never be elected by Zambians to be in government because of that Party’s exclusivity in terms of origin of the leader at the helm.
When the Speaker, whom I hold in highest esteem for his depth, knowledge, fairness and unassailable integrity requested for withdraw of the remarks I indicated that I was morally constrained to withdraw remarks that were not in any way offensive. I have scrupulously respected all colleagues on both sides of the House.
PF is strong and invincible at least in this year’s election. The development agenda and programmes of the last 4½ [four and half] years form an impeccable track record and success story. That the country is experiencing hardships now will not negate the many positive achievements made by PF.
Our candidate, whatever the share of human frailties, is outstanding. Zambians will want a man of humility and ingrained humanity. President Lungu’s humanity and sanity levels are beyond doubt and he is decidedly cerebral which does not give him a chip on his shoulders.
All of us Zambians like all people all over the world have strong emotions of attachment to our cultural/linguistic groups. We cannot abolish those natural traits and attributes in man. What we vehemently oppose are those tendencies which foster hostility to people who speak a different language or live in a different corner of the country or this planet.
Political parties should be used to advance the frontiers of our common humanity and fellowship. This is the wake-up call to the apostles of fascism however they dexterously disguise their little evil intention and agenda.
Alexander B. Chikwanda, MP.
MINISTER OF FINANCE