Cutting expenditure is less costly than borrowing– EAZ counsels govt

The Economics Association of Zambia (EAZ) is alarmed at the rate at which Zambia has continued to contract foreign debt.

The EAZ has observed that much as the newly issued US$1.25 Billion Eurobond is going to stabilize liquidity in the economy, borrowing at the present stage is not good for the country.

EAZ president Chrispin Mphuka has explained that this is because Zambia is borrowing at a time that the cost of borrowing so is too high.

Dr. Mphuka has told Qfm News by telephone that given the capability of the country to pay back the debt, there is need to slow down at contracting such private debt.

He has warned that contracting private debt at high cost at which the country is doing will have serious repercussion on its economy.

The EAZ president has advised government to take serious steps henceforth as it is less costly for it to cut down on expenditure now than and contract less debt.

He says this is particularly that his Association has already foreseen Zambia is at risk of falling into huge debt that might tie it down in subsequent years.

And Dr. Mphuka does not think that the internationally accepted debt sustainability ratio of 40 percent to a country’s GDP should be followed by the book.

He has observed that some countries in the world do not follow this threshold because it is possible that a country’s can be within such ratios but yet its debt is still unsustainable.

Dr. Mphuka has observed that owing to fragile GDP for Zambia, government should not be dubbed in to accepting advice that it continues to borrowing because the country’s foreign debt is still within sustainable levels.

He says fragility of Zambia’s GDP is evidenced by how some small shocks arising from the fluctuating prices of Oil or of copper on the international market are causing a fall in the country’s GDP.