Jubilee Zambia’s engagement with Parliamentarians and

Government on Debt:12.09.08

Study and Strategy meeting on illegitimate Debt: Quito

Priva Haang’andu, S.J.

Overview

• Brief Highlights of recent trends on Debt and Debt Management

• Current legal, Policy and Institutional Structures

• Recommendations

• Jubilee Zambia’s Legal Proposal

Brief Highlights of Recent trends in Debt management

• As JZ involved in research, education and consultation on issues of debt contraction, management and repayment for the purpose of external debt cancellation and to avoid the country going back into debt

• With Zambia having reached the HIPC Decision Point, and the MDRI, a large part of Zambia’s debt has been cancelled – reducing external debt stock from about US$7.1bill in 2004 to about US$1.8bill in 2006

• However, a number of challenges are posed as post HIPC homework for Zambia: Taking advantage of NCC – training MPs for critical contributions in parliamentary debates

• 1. how to avoid reverting into debt crisis• 2. how country can continue to put up public infrastructure that would

ensure both economic and human development without borrowing to unsustanable levels.

• 3. how to effectively ensure the people of Zambia benefit from debt relief and overall debt resources arising from recent and future debts

• As JZ we are saying we need to ensure that legal, institutional, and policy weaknesses which led to the occurrence of the debt problem in Zambia be eliminated

Current legal, policy and Institutional Structures

• Our research indicates nothing much has changed from the period before the debt crisis and after HIPC with regard to: Debt laws, the institutional arrangements among the executives, the legislature and the public. What will stop reversion, then? Political authorities still monopolise the mandate to loan contraction – no restriction on them CAP 366 – the act requires the that the minister of finance raise loans on behalf of the Republic, leaving the entire loan contraction process at the mercy of an individual with a finite term of office. With current concerns about public fraud, the national coffers are open to corruption and fraud by an individual in the short term and inter-generational misapplication of resources in the long term

• Lack of public accountability• Currently we have no debt policy and strategy to guide the management of

our debt – this is worrying because debt has been one of the major problems that has held back the country’s progress in terms of development

• Zambia does not have a centralised comprehensive domestic debt database – the data is fragmented in the MoFNP, BoZ, Pension Fund and Government.

Recommendations• Decentralise borrowing powers – establish semi-independent debt

management office which will be governed by a board that reports to a select committee of parliament

• Select committee of parliament that assesses debt issues and reports to parliament – Debt advisory committee

• Strengthen the monitoring capacity of the debt stock and strengthen debt strategy and policy – when to borrow, at what terms, and for what purposes!

• Rest cf. The JCTR Legal Proposal on handout!• We are saying to Government and NCC (for Debt Management Bill):

Finish the Work! Reform the loan contraction and debt management framework by enacting comprehensive debt management Law.

• So not only have the remaining donors to finish delivering Zambian of debt, Government too needs to honour its promises to ensure we do not revert to unsustanable debt crisis