… Shula proposes the use of Standing Orders to calculate the debt ceiling and limit the amount kept in the bank every month in gold, rather than dollars.
By Francis Maingaila
Lusaka, Zambia24 (24-05-2023) – Kampamba Shula, an independent consultant for Consumer Unit and Trust Society (CUTS) International Zambia, identified the confusion that led to the high unsustainable debt in Zambia.
Shula told journalists during a media training on Advocacy for sustainable debt management that the Ministry of Finance had been acquiring external loans in foreign currency, leaving the Bank of Zambia with an inadequate structure to control the monetary bodies.
This clash between the two entities was because one person was responsible for domestic debt while another was in charge of external debt.
Shula proposed several solutions, including exploring the use of gold instead of dollars to pay off the IMF and World Bank in copper.
He also advised bypassing the issue of court cases by using Parliament Standing Orders Article 77 to create an expanded Budget Committee that would review and discuss whether the debt should be contracted.
The consultant further recommended using the authority and provisions of the legislation to allow the Debt Management Office to be defended.
He also suggested cross-referencing the Public Debt Management Act and the Constitution to analyze the role of the cabinet in approving loans for the national profile.
Shula proposed using Standing Orders to calculate the debt ceiling and limit the amount kept in the piggy bank every month in gold, rather than dollars.
He emphasized that Japan could have a 200% GDP to debt ratio because they had assets that they put on their books, which Zambia did not calculate.
Shula’s recommendations were aimed at solving the problem of high unsustainable debt in Zambia and ensuring a more efficient debt management system.
“I remember back in 2004, there were certain conditions that required a joint reform team from the IMF and World Bank to analyze how Zambia’s public debt reform and financial management could be handled better,” Shula recalled.
“At that time, we didn’t have any public debt management or Public Finance in Zambia. But fast forward to April 2005, and we achieved the HIPC completion after taking recommendations from the IMF. It’s important to note that Zero is where everything began, and that’s where the Introduction of King Cobra came in.”
Shula went on to explain how Alexander Chikwanda, who had been the Minister of Agriculture in 1977, introduced a statutory instrument to adjust the threshold of loans and guarantees to borrow significant amounts of money. “This move caused many people to raise concerns, especially after the amendment of the Constitution in 2016 which created the Constitutional Court. Indicating that the Court had the same level of authority as the Supreme Court, the Constitutional Court went ahead to rule that Parliament’s approval of loans is not mandatory. This ruling caused many concerns, and several individuals, including former Minister of Commerce Diperk Patel, went to court to challenge it.”
“Although Patel lost the case, several issues still need to undergo a case review. For instance, some feel like the Constitutional Court did not consider all articles before making the ruling. Despite this, our focus now is on building a public debt management program after its introduction in 2022. It’s crucial that stakeholders like you continue to engage in discussions and push for legislative proposals relating to this issue.”
Shula shared his thoughts on the recent ruling by the Constitutional Court, stating that they left out 400 important articles relating to good governance in the early parts of the Constitution.
He pointed out key provisions in the Public Debt Management Act, such as the need for an independent debt office, the borrowing by public bodies, and the sinking fund.
Shula also highlighted weaknesses and omissions in the act, including the lack of a social-economic impact assessment and a long-term debt strategy. He emphasized the issue with IMF and the Breton Woods Act and encouraged further research on the topic.
Shula provided valuable insight into the complexities of debt management and its impact on the economy.