By Dennis Wei Mulenga
A rebuttal to President of PeP Mr Sean E. Tembo’s post of 31st Aug, 2021 point by point.
1. The IMF deal is necessary but could have been disastrous under a fiscally indisciplined PF so just as well they were moving in circles for the longest time. However, with a new government, it should be tabled and the ball set in motion.
2. Concessional loans vs commercial loans….. I will leave it to the public to determine which one is rational.
3. You will only have a problem with the IMF conditionalities if you are fiscally indisciplined like the previous government otherwise tell me what sovereignty was enjoyed under the PF if not just on paper? The conditions can be negotiated I believe.
4. The disbursements should be milestone based which is actually an excellent control is considering how too much at once would be tying cash to us which could otherwise be disbursed elsewhere. I mean if budget a certain portion of the package to be spent in one fiscal year, of what use will it be for us to tie the balance which could otherwise be used by other recipients during the same period? This practice happens everywhere even here in Zambia, I was attending an EU workshop for Challenge funds which work with milestones so for me really, draw-downs are just fine provided we negotiate to have us receive cash as per program budget for a fiscal year. Shall we then get into the milestones as highlighted by Mr President highlighted for purposes of not digressing far from his concerns;
a) ENFORCE A WAGE FREEZE FOR CIVIL SERVICE. What would better, negotiate for a flexible partial wage freeze or continue on this path the whole 5 years without employing on premises of lack of resources?
b) PRIVATIZE ZESCO & ZAMTEL. Well in my understanding, that should not come as an outright instruction neither but a call to re-organize the said companies to profitability status and should they fail, that’s when such recommendations as as SELL may arise. This is normal practice even in the private sector. If you can’t run your company, invite equity partners or just sell it because you would have failed to run it. I mean IMF would not want to fall for some Katondo stories of “I will pay you” and yet you have no means of generating cash.
c) FREEZE ALL NEW INFRUSTRUCTURE PROJECTS. Mr President, in the previous Infrastructure had been financed by loans. Mostly Chinese loans who we have been giving 80% in contracts to do these works as they collect their money or write us in their receivables as we remain indebted to them. All these toll gate initiatives where put in place but to date, I don’t know what this money is used for when it hits control 99 such that no revenue reports are even issued no more. May I remind you that only 9% of our Budget can be spent on social sector activities after paying debt and civil servants wage bill so why not suspend these projects in the interim until some recovery is recorded?
d) FREEZE ALL WELFARE PROGRAMS IE SCT & FISP. This comes back to re-organizing ourselves including curbing corruption and pilferage of cash and supplier inputs. This they can intervene by assisting in implementing controls on how this cash and farmer inputs are distributed and that they reach the intended user. Only plunderers will complain as this will not fulfil their insatiable appetite to line their pockets, a position I have not placed you in….well yet.
e.t.c
5. I agree, there is need to seal financial leakages as well as re-alignment of Domestic revenue and expenditure. This may include but not limited to revising policies so as to put us in a better earning position. This in the short to long run will see us enhance economic activity that will eventually subsidize the challenges in meeting debt obligations. On your comments on the President of the Republic of Zambia Mr Hakainde Hichilema and his choice of Minister in Dr Situmbeko Musokotwane, again you are attacking personalities so please just move on already because HH is the President voted into office by north of 2.8m Zambians to assemble a team that will deliver to their aspirations.
6. Yes there is need to revisiting the Mining policy so as for us to maximize on Domestic Revenue collections from various taxes, however, that K8billion tax assessment on FQML you are making reference to Mr President was actually $8,040,000,000 ($8.04billion) or K76.5billion at the time. This tax assessment was made over a mine with a market value of $11billionn and translated into a liability equivalent to 107% of our National Budget in 2018 as presented by Former Finance Minister; Hon. Felix Mutati which sat at K71.6bn. Mr President, you should have done your homework before embarking on those simple multiplication models which would have aggregated a tax liability of $104bn or K998billion at a then fx rate of $1 to K9.5…..Very insane if you ask me. You are misleading the masses Sir and ZRA had to quit pursuing that matter as it did not make sense at all.
Further, your simplistic approach in multiplying K8billion by 13 companies is far-fetched because we cannot assume that these companies have the same input/output capacity. Once again on Republican President HH and Dr SM, again you are attacking personalities which is most unfortunate coming from a person like you that is seeking the people’s goodwill to become President of the Republic of Zambia. Kindly refrain Sir.
7. By “They left us with a broke economy”, yes it is true as can be evidenced by the current statistics where we have debt portfolios as follows; Domestic, $6.8billion, Domestic Arrears, $5billion as of today; and Foreign, $13billion before we even ascertain the true position when we get a clear picture of what is owed to china as well as taking into consideration the recent statement by the Minister of Finance that we had borrowed even during the election campaign period most likely domestic borrowing through bond auctions in the last few months/weeks(pensive). With this debt stock against our domestic revenue both tax and non tax, there will be no development to speak of as we will be moving at a snail’s pace with 9% of the budget on social sectors much to the disappointment of the electorate that voted for the UPND who will be quick to vote them out in 2026.
8. Lastly, I’m nobody’s baby sitter so I won’t comment on your lamentations about having been threatened and or beaten, however Mr President and my elder brother, I would just implore you to be sober when you offer checks and balances devoid of bad-mouthing the Government and the Republican President in particular whom you have attacked even when he was in opposition and continued to do so even now 1million+ votes away into power.
In conclusion Mr President, your concerns seem unfounded and I personally feel you have embarked on seeing this government fail by proposing that they put away the IMF deal so as to enhance your popularity in 2026 otherwise the IMF deal should go ahead except to be negotiated under less harsh conditions which I believe The Minister of Finance is in a competent position to do so.
Disclaimer: These are my personal opinions and they do not represent nobody but me and my limited understanding of street-analysis!
Twalumba
Dennis ‘Wei’ Mulenga