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Increase in debt servicing might suffocate service delivery – Mutati

FELIX Mutati says the expenditure side in the 2020 national budget which shows almost 50 per cent increase in debt servicing may suffocate service delivery.

The former finance minister says this increase may further compromise growth and impact on macro-economic fundamentals.

Mutati was speaking at a post budget analysis hosted by KPMG at Hotel InterContinental in Lusaka on Monday.

However, he remained confident that finance minister Dr Bwalya Ng’andu would keep to the principle he announced of commitment anchored on determination and discipline.

“The minister showed great courage by discarding sales tax because it was creating uncertainty for business, creating anxiety for consumers and by discarding it, he pushed back on job losses,” Mutati said.

“By dismantling domestic arrears, he is creating opportunities to boost the domestic revenue collection on the back of increased liquidity in the economy. Fiscal fitness will in turn allow him to re-engage on a practical basis with the IMF thereby sending a positive signal that will boost credibility and confidence in investors.”

He said the increase in debt repayment in the budget would hinder economic growth.

“On the expenditure side in the budget, there is almost 50 per cent increase in debt servicing and that may suffocate service delivery. It may compromise growth and it may impact on macroeconomic fundamentals,” Mutati said. “But the biggest principle that I see the Minister has announced upon is that he is going to keep his commitment anchored on dedication, determination and discipline.”

Mutati also said the government might have challenges in attaining the almost K30 billion projected foreign financing when weighed against the strategy for debt management and restructuring in the 2020 national budget.

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