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By KALONDE NYATI
GOVERNMENT has been urged to prudently manage its debt if the country is to avoid falling into another debt trap, former Minister of Commerce, Trade and Industry Felix Mutati has said.
Mr Mutati (left) who is Lunte Member of parliament, said there is nothing wrong in accruing debt but there is need for the country to ensure that it is properly managed and is efficiently used to implement growth projects.
“Overall, there is nothing wrong to procure debt but debt management is what must be critically examined – placing a lot more emphasis from merely securing commitments or committing the money to projects to enhancing the implementation capacity.
When you get debt and put it in the bank …you are eroding the capacity of the economy to be able to pay back,” he said.
Mr Mutati said this in an interview in Lusaka last Friday.
He said although debt is within sustainable levels, the rate at which it is being accumulated is worrisome, hence the need to reduce on borrowing because the country risks failing to repay it.
“The accumulation of debt is being bundled and when you bundle debt in such a fashion that when it falls due for repayment, we may have a situation where the economy’s debt carrying capacity may not be sufficient,” he said.
Zambia’s current external debt stands at US$ 3.1 billion (about 16.57 percent of gross domestic product).
Secretary to the Treasury Fredson Yamba said recently that the external debt is sustainable by internationally set fiscal standards.
Government has paid a total of US$151.5 million towards servicing of external debt from January to November this year and a further K9.2 billion towards the servicing of domestic debt, especially for obligations related to Government securities.
Mr Mutati also said there is need for Government to meet the targets outlined in the national budget.
He said it is only when the targets are met that the country will be able to increase the number of jobs.
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