Increased govt expenditure draining out liquidity – Mutati

Former Commerce Minister Felix Mutati has observed that increased government expenditure is what is draining out liquidity in the Country’s financial sector.

Felix Mutati

Mr. Mutati says this non availability of liquidity is making banks in the Country no longer able to lend money.

In an interview Mr. Mutati who served as Cabinet Minister under the MMD government says as a result the private sector is consequently chocking.

Mr. Mutati says this is because there is no business that can sustain borrowing with an interest rate nearing 40 percent at which banks are being compelled to lend money.

He says all these challenges put together it should not therefore be surprising to see a continuation in the rise of the Country’s inflation.

Mr. Mutati suggests that it thus prudent for government to consider the proposals that the International Monetary Fund (IMF) has made to salvage the economy.

He states that the key answer the IMF has given is to simply fiscal control.