Finance Deputy Minister Miles Sampa recently signalled that Government intends to borrow more from the international markets" :
“...We are sitting around 30 percent of GDP ratio and we would be comfortable to increase that to around 45 percent of GDP and we would be going back to the international market as soon as all arrangements are put in place. Our debut issuance was very successful, remember it was oversubscribed and we believe the interest in Zambia among the foreign investors is still high and we want to cash in on that...We should not be scared to borrow as long as we are able to pay back...We have said no to increasing taxes for our people because we are a caring government. So taxes won’t go up and our only choice is borrowing from the market. There is no country that does not borrow, the USA, Japan, name them, they all borrow to develop but what is important is paying back...”
There's no doubt Zambia is able to borrow more. But the borrowing is being done without Parliamentary oversight and general scrutiny. If we had a proper Debt Management Bill in place then the situation would be different. Right now the Government has not published its Debt Sustainability Analysis. So how do we know it is sustainable to borrow? How do we know we can afford to pay back without significant cost cutting in other areas? I have previously touched on this issue here.
Sampa also has a poor understanding of economics. Debt incurred today means higher taxes tomorrow than would have been the case. So to say we don't want to tax people just does not make sense. You are taxing future generations by borrowing today! How do you think that debt will be paid back? Of course this argument does not strictly apply to domestic borrowing (an issue of much debate in Europe), but it certainly applies to external debt. This is very cardinal. It is never wise to build an economy on large foreign borrowing because it makes us poorer in the long term.
What is clear is that when Sampa thinks about "people", he only thinks about voters in 2016. He does not really care about Zambians living beyond 2016 - for now. If large debts are incurred by Sampa and his friends at the Ministry of Finance, that's for future governments to worry about. But as citizens we must care because it is us who will still pay it back. Our interests diverge from Sampa's interests and therein lies there problem.
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