HAKAINDE Hichilema says while it will be difficult to reverse the damage caused by the PF government on Zambia’s socio-economic status, his government will be equal to the task. Hichilema, the UPND leader, observed that when a country like Zambia resorted to depleting its foreign exchange reserve in order to “meet its debt service,” such could be a signal that the country was failing to generate sufficient foreign exchange from its normal international trading activities.
He explained that any country that fitted the above description was likely to fail to meet its future international obligations, including debt service and amortisation (principal debt repayment,) leading to debt default, “a sign of poor credit/financial/economic management.”
“In simple language, such a country presents a higher risk to those who do business with it. This is reflected in difficulties to source funds and high interest charges by those lenders who may be willing to avail funds to our country,” Hichilema told The Mast yesterday.
“So, going forward, our country will not only experience a debt crisis but also a liquidity crisis and other ordinary life stresses.”
The opposition leader said politics and running a country was not “a game but serious business.”
“My friends, PF has put our people and country in a huge mess. As I have said to you and others before, politics and running a country is not a game but serious business. It will be difficult to reverse this damage but we are, however, equal to the task,” Hichilema noted.
And Hichilema indicated that the fact that finance minister Margaret Mwanakatwe misled the nation with “inconsistencies and falsehoods” with regards to declining foreign exchange reserves at the Central Bank was a confirmation that “the PF has lost its salt and credibility to provide effective leadership in our country.”
On Tuesday, Speaker of the National Assembly Dr Patrick Matibini ruled that Mwanakatwe misled the House by giving two contradictory responses to similar questions raised by two members of parliament last year. On December 11, 2018, Chipili independent member of parliament Jewis Chabi asked Mwanakatwe why there was a decline in the foreign exchange reserves at the Central Bank. A similar question was earlier raised by Moomba UPND member of parliament Fred Chaatila on why the foreign exchange reserves had declined by 28 per cent.
In her response to Chaatila then, Mwanakatwe said the decline was on account of debt service, coupon payments on the Euro bonds and increased imports of petroleum products. However, when Mwanakatwe was asked by Chabi on why government used foreign exchange reserves to pay debt, she backtracked and responded that government did not use foreign exchange reserves to service Euro bonds and stressed that government used its own earnings to pay for the Euro bonds.
The minister went further to say osanama boza (don’t lie).
“We do not use reserves to service Euro bonds; we use our own earnings,” Mwanakatwe said then, a response which prompted a point of order to be raised against her for giving contradictory responses.
Rendering a ruling which had been reserved, Dr Matibini ruled that Mwanakatwe was not in order as one of her two contradictory responses to a similar question was definitely not correct because she responded to the same question with different answers and as a consequence misled the House and was out of order.
Commenting on that matter, Hichilema said such behaviour dented Zambia’s credit rating which “increases the country’s cost of borrowing.”
“That is why not long ago, the PF could not give Zambians the country’s true debt position. Even now citizens are not being told the truth about the extent of the country’s financial and economic crisis, hence the delays in payment of public sector salaries/allowances/benefits, withdrawal of students’ meal allowances, no jobs for the youth, more and high taxes, high cost of mealie-meal and living overall and hunger in our people’s homes,” he explained.
“Even with such challenges in the country, PF can be so insensitive and insulting to Zambians to the extent of spending colossal amounts of money on buying luxury vehicles for ministers and a presidential jet reported to be costing the already suffering and over-taxed Zambians US$400 million.”
Hichilema emphasised that once it formed government, the UPND would focus on recovering the country’s credibility in leadership and restoring integrity in financial and economic management.
“[We’ll] reduce the debt burden through a combination of measures, including restructuring of the current expensive debt, cut PF’s appetite for consumption expenditure and corruption and replace it with our UPND’s focus on investment expenditure and zero-tolerance to corruption in order to trigger higher growth to create more jobs for the youth, women and others,” Hichilema pledged.
“We will also reduce the current PF’s high tax burden as part of our menu of measures to lower the cost of living and promote household savings while promoting investments among Zambians.”
He pointed out further that the PF government’s use of foreign exchange reserves to service debt would impair the country’s ability to meet its minimum and essential import bill.
“Such could reduce domestic production, increase the country’s cost of borrowing, cause the local currency to lose value, erode confidence in the country’s financial and economic management capabilities with serious other consequences,” explained Hichilema.