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Thursday, 18 November 2010

Debt Watch (World Bank)

Thought it was about time we started a thread that tracks new debt obligations by the government. We shall keep tabs on this through the "aid" tag. Last week ZNBC reported a new $150m loan to Zambia by the IFC :
The International Finance Corporation-IFC, an agent of the World Bank, says Zambia will next year receive 150 million US dollars credit meant for irrigation. Vice President Ars Phunell says the credit is meant to support irrigation projects at three yet to be identified sites in the country. And World Bank Country Manager Kapil Kapoor said the credit facility will be repaid in the next 20 to 30 years.

And Commerce Minister Felix Mutati said government is embarking on several infrastructure projects in rural areas, to give an opportunity to rural dwellers to participate in the economic success of the country. He named one of the projects as Kasaba Bay, which is creating investment and jobs.

1 comment:

  1. Debt contraction by our Government remains for me a worrying phenomenon. My simple (lay man's) analysis suggests that since the debt write-off of 2006, Zambia's external obligations have been increasing at an average of 15% per annum! I am not averse to correction.

    I have of course seen a few infrastructure improvements and some notable growth over the last three years or so. But I am not sure that there is a healthy and commensurate relationship between the contracted debt and the socio-economic change thereby engendered.

    My suspicions are:

    i) that we can't live without debt: while debt is inevitable for any public or private entity that seeks to survive and grow, there is no solace in the manner in which we have used debt in the past. Neither is there hope that debt for us will eventually create an economy in which our net value is positive.

    ii) the lack of participation in the contraction of debt by major stakeholders, including civil society, and the anxiety occasioned thereby suggests that we may be heading back to pre-write-off times when debt not only limited our credit worthiness but thwarted attempts to redeploy our incomes into the economy.

    Having said this, I wish to conclude that no well meaning citizen will work their socks off to prevent the contraction of national debt. The concern lies in the purpose and the soundness of the planning for debt.


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