FELIX Mutati says only a HIPC-style debt relief can effectively mitigate the devastating economic effects of the coronavirus pandemic on poor nations like Zambia.
Commenting on Zambia’s first death out of a coronavirus case, Mutati, in an interview, said the coronavirus was faceless and spares no one.
“Already our life as Zambians has been disrupted. It is affecting particularly the poor people of Zambia much more, including the small and informal business. It is changing the entire life landscape. This virus has also slowed down economic activities,” Mutati, a former commerce minister during the MMD administration, said.
“Some of the key sectors that have been affected severely are tourism, the transport sector and trade. We have a situation where small and medium size businesses and indeed other businesses, are facing bankruptcy; are facing closure and the result of this, there will be loss of jobs, and the inability to be able to survive, purely as a nation.”
He noted that the capacity of the Zambian treasury to provide the financial stimulus required to revive the economy was absolutely limited.
“Sometimes we look to treasury, but our treasury is limited. The capacity for the treasury to be able to provide the financial stimulus that is required to revive the economy is absolutely limited. That is why we need to come together as one,” he said. “Debt relief has been spoken about, including debt restructuring. Within the context of the challenges that the economy is facing, within the context of the coronavirus, I think what we should be adding a conversation around is debt relief HIPC-style.”
Mutati, a former finance minister under President Edgar Lungu’s government, recollected that Zambia secured debt relief through the Highly-Indebted Poor Countries Initiative (HIPC) in 2005.
“Because of that type of relief, we inject not only oxygen in the economy, but we will deal with the installments that are falling due, that are going to be wiped out. That is what we need. We don’t need the postponement of the repayment of debt; we need the extinction of the debt. That is what is going to turn this economy around,” he stressed.
“In July 2005, we reached the HIPC completion point. Today, we are having a conversation around debt restructuring and debt relief. But because of the intensity of the coronavirus, and disruption that is happening to the economy, not only the economy of Zambia, but for most of the poor countries, we should elevate our conversation that the part of debt relief we must have should be the HIPC-style, where we eliminate the repayments and not merely postpone the repayments.”
Mutati further said now was the appropriate time for highly-indebted poor countries like Zambia to engage international development partners and discuss this HIPC-style debt relief in the wake of the coronavirus pandemic.
“This HIPC-style debt relief will inject approximately 40 per cent back into the Zambian economy,” said Mutati.