ZAMBIA: Don’t Ignore Debt, JCTR Urges Government
By Mwenya Mukuka
The Jesuit Centre for Theological Reflection (JCTR) has expressed disappointed that Zambia’s policy priorities over the coming months stated in the State of the National Address has completely ignored debt with no mention of both the levels of debt and how they will be addressed.
On Friday 11th September, 2020, President Edgar Lungu made the much-awaited State of the Nation Address dubbed “Dedication, Resilience and Innovation: Pursuing Economic Recovery for the Zambia we want”, the President highlighted the socio-economic challenges that the country continues to face and set the policy direction over the coming months for the nation.
However, JCTR has said debt remains one of the gravest problems Zambia faces.
In a statement, JCTR Social and Economic Development (SED) Programme Manager Chama Bowa Mundia said while JCTR acknowledges that climate change, falling commodity prices on the international market, and most recently, the disruption on lives and livelihoods caused by the COVID-19 pandemic pause significant challenges, debt is the elephant in the ‘room’.
“But yet again, Government appears to be kicking the can down the road when it comes to debt. Evidently, Zambia’s fiscal deficit as a percentage of GDP has been on the increase since 2011 moving from -1.8% to -6%. This is significantly above the average Sub-Saharan African deficit levels in the same period. The country continues to increase expenditure at the backdrop of reduced revenues. Additionally, public debt as a percentage of GDP has been on the rise from 21% in 2011 to over 100% in 2020, again way above Sub-Saharan African average levels. The result: more debt to fill the fiscal deficit,” said Mundia.
She noted that the nation’s public debt has between 2011 to date increased at an alarming rate with external debt rising from US$3.2 billion in 2011 to US$11 billion as at the end of December 2019.
“Sadly, current debt levels surpass pre-HIPC (Highly Indebted Poor Countries) levels that were estimated at about US$7billion,” she said.
At the turn of the new millennium, late Cardinal Joseph Mazombwe led a debt cancellation campaign that saw Zambia’s debt being cancelled but the debt burden has since swelled.
The JCTR has since called on government not ignore debt.
“Pursuing economic recovery for the Zambia we want without addressing debt is a pipe dream. Dedication, resilience and innovation are what is needed in our war against debt now more than ever. For one, according to the Ministry of Finance, in the wake of COVID-19, total revenue collections for the first half of 2020 (January to June 2020) were 5.1% below target due to the involuntary scaling down of productive activities across all economic sectors. With dwindling revenues and rising interest payments (given the depreciation of the local currency), debt must be addressed,” Ms. Mundia said.
And Ms. Mundia has said that without addressing debt, funding to essential sectors such as education, health, and social protection will remain a challenge as financial resources will be channelled towards public debt servicing.
“Without funding to essential sectors, attaining considerable levels of human dignity for the Zambian people will remain elusive. JCTR therefore urges the Government to make prudent decisions now before a full-blown debt crisis erupts as payback time particularly for the Eurobonds nears,” she added.
