Economist welcomes increase in government’s domestic borrowing

A Lusaka based economist Trevor Simuumba has welcomed government’s decision to increase the domestic borrowing threshold saying it will provide the administration with funds to complete infrastructure projects that have stalled because of the budget deficit.

Mr. Simuumba said the budget deficit that government was currently experiencing has led the state to have no money to finance the many economic projects currently being undertaken in the country.

He told ZANIS in an interview in Lusaka today that government should therefore ensure that infrastructure projects it has embarked on finish on time in order to generate revenue that can be reinvested into other projects.

Mr. Simuumba said doing so will justify the increase in domestic borrowing.

He also called on government to be strong on resource expenditure management to ensure that people who were charged with the responsibility of implementing these projects use the resources allocated to them prudently.

Mr. Simuumba further said government should ensure that only credible contractors are given the contracts to undertake economic projects.

He said this is in order to measure to curb stalling of infrastructure development projects.

He said contractors must also be paid on time because delayed payment of funds to contractors has been one major hindrance to the prompt completion of projects in the country.

The economist further encouraged government to prioritise projects saying the state cannot do everything at the same time.

He said government’s focus should be directed at projects that will give it quick returns such as the renovation and expansion of airports, the construction of economic roads and railways.

Mr. Simuumba has however raised concern that increasing the domestic borrowing threshold may result in government’s failure to reach its fiscal target which currently stands at five percent.

He said the move may also cause some instability in the market and may further cloud out the private sector.

Mr. Simuumba further feared that the cost of borrowing in the country will go up as commercial lending institutions may only want to lend to government and not private individuals.

Parliament recently approved the motion that was moved by Finance Minister to increase the domestic borrowing threshold from K200 million to K13 billion to finance economic projects in view of the budget deficit.