Economist Oliver Saasa has implored Government to expeditiously invest moneys it borrows from external sources into productive business ventures for it to generate sustainable returns for servicing foreign debts.
Professor Saasa said delaying to invest such funds into viable businesses can be catastrophic for the growth of the country’s economy as it will led to a debt crisis.
He told ZANIS in an interview in Lusaka yesterday that government should only borrow such funds when it is ready to spend.
Prof. Saasa said it is disastrous for government to borrow and put the money on hold citing the Eurobond loan as a case in point where he said most beneficiaries of the fund took long to utilize them.
He said it was unfortunate to note that the majority of funds government borrows from external sources go towards social spending such as salaries, wages and remuneration instead of investing in economic ventures that will generate sustainable returns.
He said it is imperative for government to borrow sustainably on the basis of the projected economic growth.
And Prof. Saasa said Zambia has the ability to service its external debts but with stress owing to the poor growth of the country’s economy which failed to reach the seven percentage growth target.
He said the mining sector has not done so well with the drop in copper prices, while the agriculture and tourism sectors have not performed to expectation despite the massive potential.
Prof. Saaa further urged government to be prudent in its financial commitment and spending for the wellbeing of the country’s economic growth.
The renowned economists’ comments come in the wake of the announcement by the Secretary to the Treasury Fredson Yamba who disclosed that government has since January to November this year paid a total of US$151.5 million to service external debt.
Mr. Yamba said the national debt now currently stands at US$3.1 billion.
ZANIS
I doubt if PF can hear this economic language.
Professor, a development expert, is Managing Consultant/CEO at Premier Consult Limited, Lusaka. He is Professor of International Economic Relations and former Director of the Institute of Economic and Social Research at the University of Zambia (1988 –2000). Professor Saasa has published extensively in the development field and has consulted locally and internationally in the fields of trade, investment, poverty and aid effectiveness.
I enjoyed his book Economics and development review page 109 mission unaccomplished.
That how it goes
While Prof. Saasa’s comments on the slow rate of investment of borrowed funds resonate with me, I think that he has not looked at the reason for the slow rate at which borrowed funds are being invested. While there is always a time lag between sourcing funds and their eventual utilisation. In the case of government, the lag is particularly long the world over due to bureaucratic procurement procedures. On one hand you want to have a robust process that eliminates the misuse or misapplication of resources while on the other, you want to utilise borrowed monies quickly; to earn a return. The answer in my opinion, lies in the simplification of the procurement rules while safeguarding against the risks of misapplication or misuse of loans.
Coward,always on the fence!
what about prof. Atanga? in which field is he a prof?
Man Love you never had debt before from your explanation. you borrow mainly because you have an agent need, we are not the bank to keep monies idle while accruing interest, keeping money idle shows CNP, don’t forget that money is losing
value very fast , lastly idle money leads to corruption with all these latest cyber criminals that can be their target and wipe it off from whatever bank you kept it.
Simply put having a term structure of your loans carefully fitting in in your Returns and risks
That is why I commented that the information could have incorporated the whole financial statements and Gov. cash flows to see how the outlook will be not simply the disbursements helping people to see long-term thereby avoiding any speculations on the mismatch of loans disbursements and returns.
A mere outline of disbursements is not informative but is encouraging.Its like looking at your assets here and paying particular attention to the maturities as you invest avoiding the costly rollover that may be foreseable
Make use of IFRS 3 and IAS 1 and 12 to unwind such and raise sufficient revenues if possible make use audit firms to unwind
How far is Zambia Railways in rehabilitating the lines and restocking the rolling stock? We were told that ZR was to get an allocation from the Eurobond funds? Surely, we cannot let that vital mode of transport deteriorate further. We need an efficient rail transport network to reduce transport costs, reduced road damage and the obvious economic benefits that will accrue to surrounding communities. Those of us who saw ZR in action in the 60s and 70s are aware of the importance of this asset to our economy. I think I miss the enthusiasm of Prof Chirwa. To me he represented modernity and aggressiveness. I have yet to hear Atanga……
We are fast drifting back into the bottomless pit we were recently pulled out of! Zambia in the dark.
Wonder who to faulty? These ignorant men at the helm of power or the ignorant electorate that voted to put them in power?