The PF on Wednesday afternoon, assisted by MMD and UPND rebel MPs defeated opposition members of Parliament who tried hard to convince the PF government not to increase the foreign borrowing limit from the MMD’s allowed (1998) K20 billion to K35 billion.
The Notice of Motion read as follows: Increase Amount Outstanding at Any One Time on External Loans: That, in terms of Section 3 of the Loans and Guarantees (Authorisation) Act, Chapter 366 of the Laws of Zambia, this House authorises the Minister of Finance to increase, by Statutory Instrument, the amount outstanding at any one time on external loans from twenty billion kwacha to thirty-five billion kwacha re-denominated currency.
During debate, Solwezi MP Lucky Mulusa, said it was strange that the Minister of Finance never spoke about such an important move during his budget policy statement. He said that it was strange that at the time when the IMF had ordered the government to drop food and fuel subsidies and ordered a freeze on salaries and employment, the government could suddenly undertake to increase the foreign borrowing limit. Hon. Mulusa said what would have been consistent with such intervention if the IMF meant well would have been further fiscal discipline measures and not indiscriminate borrowings that are not guided by a borrowing strategy nor a well thought through capital expenditure programme.
Mulusa explained that the only reason the IMF ordered withdrawal of subsidies and a freeze on wage increament and employment was to create fiscal headroom needed for an increased debt serving that would come with convincing Zambia to borrow more in order for the investors who are stuck with low borrowings from the emerging markets to acquire more borrowers. Mulusa explained that after the 2008 financial crisis mostly created by developed nations, there is more appetite to lend to resource based emerging economies rather than developed nations. With Zambia’s debt sitting at way below the allowed limits, the country has become a target for unsolicited debt offers and if this was not the case, IMF would have stopped the PF government just as it stopped subsidies and wage increments.
Others who debated against the motion were Former Finance minister Situmnbeko Musokotwane who cautioned the government never to go ahead as the arguments of favourable parameters would not hold water in reality. H
MP Catherine Namugala cautioned the government that Zambia went through a lot to achieve the Highly Indebted Poor Countries (HPIC) status, which qualified the country for debt forgiveness. Chipata MP Mutolo cautioned the government against reliance on the fallacy of parameters such as debt to GDP ratio because productive capacity needed to be achieved with the debt so acquired. Mweengwa MP Haive Hamududu argued that the mere fact that the Eurobond proceeds have not been well applied and yet the government is already paying huge interest expenses shows that the country is headed for disaster. He added that the PF was a danger to the well being of Zambia.
All the debaters from the opposition benches raised concerns that make at the prospect of Parliament allowing the Minister of Finance to stretch foreign borrowing limit from K20 billion to K35 billion. They reminded the PF that Zambia just saved itself from a US $7 billion debt and but PF is taking the country several years backwards.
The arrogance of numbers saw the motion going through 50 to 75.