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OPPOSITION Members of Parliament (MP) yesterday refused to back a motion by Finance Minister Alexander Chikwanda seeking to increase the threshold of domestic borrowing from K200 million to K13 billion, among other adjustments.
Alliance for Democracy and Development (ADD) Luena Member of Parliament (MP) Mulumeui Imenda said once the threshold for domestic borrowing was increased, the country risked falling into a debt trap.
“I oppose this motion, we are coming from a background when we were heavily indebted whether domestically or internationally and we are now going back to the same situation. This development is bringing shivers,” Ms Imenda said.
She said if the borrowing threshold was increased, it would also trigger a hike in interest rates, apart from suffocating private sector participation in economic affairs as borrowing would be difficult for them.
United Party for National Development (UPND) Monze Central MP Jack Mwiimbu, in opposing the motion, expressed fears that Government would fail to pay back the domestic debt.
Mr Mwiimbu said a similar approval of the threshold for international borrowing last year led to indiscriminate borrowing by the Government.
“Government has been failing to pay contractors and that is why they want to increase the borrowing threshold.
“A number of countries that are in the habit of borrowing are now on their knees, that is where we are heading to,” Mr Mwiimbu said.
Mwandi MMD MP, Michael Kaingu felt that increasing the domestic borrowing threshold would plunge the country into unsustainable debt.
“Excessive borrowing will not benefit the economy and the paradox of heavy borrowing is that it will choke the economy and negatively affect the private sector,” he said.
In presenting the motion, Mr Chikwanda assured the House that the increase in the borrowing threshold was meant to help Government implement various economic projects in view of the Budget deficit.
“Raising the threshold will help Government to implement the various projects. This borrowing will be sustainable, it will not disadvantage the private sector,” he said.
He said Government regarded the private sector as key players in advancing economic growth, adding that borrowing would not be done indiscriminately.
The minister assured the House that Government would endeavour to get loans for the progression of the economy and would ensure it was within sustainable levels.
Mr Chikwanda proposed to increase domestic loans, payable over a period of 10 years, from K200 million to K13 billion.
Others were to raise domestic loans within the Republic, payable over a period of more than one year, from K10 million to K20 billion, as well as the contingent liability of loans and guarantees (Authorisation) Act, to persons ordinarily resident in Zambia, from K2 million to K2 billion.
