Increase in domestic debt worries CSPR
The Post Zambia, June 30, 2010

CIVIL Society for Poverty Reduction (CSPR) has expressed concern at the increase in domestic debt over the past four years.According to a report released by CSPR executive director Patrick Mucheleka, domestic borrowing has been on the increase since 2006.

“In 2006, domestic debt was 0.5 per cent of GDP, while in 2010 it went up to two per cent of GDP,” he said. “Also, as a percentage of revenue, domestic debt is on the increase and the current projections are at 8.9 per cent of the country’s total revenue.” Mucheleka said the increase in domestic debt was of concern because of ripple effects it had on the economy in general.

“The fiscal management, interest rates and treasury bills are all going towards debt servicing,” he said. “This means that resources meant for social services to the poor and needy are diverted to servicing debt.” Mucheleka encouraged the private sector to push government to honour her debt obligations and unite to discourage borrowing for consumption.

And African Forum and Network on Debt and Development (AFRODAD) executive director Collins Magalasi said since the global economic crisis, concessional lending and balance of payments had reduced.He further observed that there had been a sharp decline in commodity prices whilst demand for government expenditure had increased, putting government under pressure.

“Government is forced to look to domestic resources for finances as it is accessible, cheaper, easier, and government has one hundred per cent control with no pressure to honour its debt obligations,” he added.Magalasi urged the government to ensure debt sustainability, adding that some governments had gone down because of debt.

Meanwhile, CUTS-International acting centre coordinator Patrick Chengo has said there is need for Zambia to seriously take some of the Aid for Trade initiatives to those that aim at bringing a positive dimension in the way the country trades.In a press statement, Chengo observed with dismay that the Enhanced Integrated Framework (EIF) in Zambia was dying out after the organisation’s efforts to bring the issues to the fore of both government and the public sector.

“It is saddening to learn about the non-existence of the National Implementation Unit (NIU) in the Ministry of Commerce Trade and Industry... 2009 was a good and positive year for the EIF in Zambia, as CUTS and the then existing NIU personnel had a vigorous capacity building campaign through a CUTS project dabbed EIF for Poverty Reduction funded by the Finnish Embassy. Nevertheless, CSOs will always be there to compliment on government positive efforts but there will always be a limit,” Chengo stated.

Chengo added that through the work of the NIU, CUTS-International expects Zambia to increase donor support for its trade development agenda and formulation of a National Trade and Export Development.“This strategy will ultimately result in securing more funds for financing pro-poor activities and growth strategy targeting the areas identified as conducive to poverty reduction,” stated Chengo. “Therefore, realising it's non-operational, Zambia stands to lose out.”

And CUTS executive board member Ambassador Love Mtesa stated that trade could be a very useful tool in poverty reduction; hence the need for the government to ensure that institutional structures were in place in order to reap benefits from available aid.

Ambassador Mtesa further appealed to the Zambian government through the Ministry of Commerce, Trade and Industry to help ensure that the NIU was strengthened and in full operation without delay so that Zambia could quickly access different kinds of support from the EIF and Aid for Trade.

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