Debt contraction should be transparent - JCTR

THERE is need for Government to be transparent in debt contraction and prudent utilization of debt resources to avert unnecessary debt burden on Zambians, the Jesuit Centre for Theological Reflection(JCTR) has advised. According to latest JCTR Press Release made available to the Daily Nation by Media and information officer, Enock Ngoma, Zambia’s external debt has been on the rise in the past few years, with domestic debt stock in terms of securities and bonds standing at K60.3billion as at June 2019 compared to K15.1 billion in 2011. JCTR stated that  over the years the external debt had risen to alarming levels from US$3.2 billion in 2011 to $10.23 billion as at the end of June 2019. “The current debt-to-GDP ratio thus stands at over 50% of GDP. Cognizant of the burgeoning public debt, its negative implications and the need for its prudent management. Government put in place the 2017-2019 Medium Term Debt Management Strategy (MTDS) and one  of the intents of the strategy was to reduce the rate of accumulation of foreign denominated debt. But what the country has witnessed over the years is rising external debt contraction and the corresponding increase in interest payments and in  view of this state of affairs, the 2017 International Monetary Fund (IMF) Debt Sustainability Analysis (DSA) indicated that Zambia was at high risk of debt distress,” stated the statement further. JCTR stated that the country should not  misconstrue the 2020 World Bank report on Zambia to mean borrowing was good and  has no limits, adding that evidence both globally and domestically indicated that rising debt could be detrimental to the national economy. It stated that in 2018, fiscal authorities spent K6.2 billion as external debt interest payment due to the huge external debt and the resultant increase in debt service obligations which affected social programme spending like pensions and social cash transfer, Strategic Food Reserve, and Water and Sanitation programs. “It is for this reason that the 2020 World Bank Global Prospects report highlights the need for strong regulatory and supervisory regimes, good corporate governance and improved debt transparency and debt management among others at the backdrop of every country’s debt management efforts to avoid scattered investment, waste, and loss of investment capital,” the JCTR has said.