The Zambia institute of chartered accountants – ZICA has challenged Government through the ministry of Finance and National Planning to consider having a plan B in case the debt restructuring process takes longer than planned stating the country may lose gains achieved so far.
ZICA says another option the Zambian authorities could consider is to arrange a one- on-one meeting with the Chinese authorities since China has been singled as delaying the process. She noted that Zambia already enjoys a cordial relationship with China and a visit would be worthwhile to strengthen our relationships and speed up the debt restructuring process.
Speaking during the ZICA media briefing for the first quarter of 2023 on matters that affect the Accountancy profession and the nation at large and attended by the Zambian Business Times – ZBT, ZICA President Cecilia Zimba said the Institute takes keen interest in the ongoing discussions and developments on the country’s debt restructuring process and join all the concerned parties and partners who have expressed deep concern about the debt restructuring stalemate.
Zimba said as devoted citizens, ZICA would like the country to come out of the negative tag attributed to its default status since 2020, so that the Government can properly execute its economic recovery plan.
“Much as the Debt issue is a big matter concerning the country’s economy and a lot hinges on it, the budget for 2023 is dependent on a restructured loan facilities from our creditors and we know how detrimental it will be if this debt restructuring does not happen and that is why we are saying let’s put in place measures that will boost our revenue collection and start to address some of the areas of the economy that need urgent attention.”
“We, therefore, urge the Minister of Finance to keep pushing and start considering having a PLAN B in case the debt restructuring process takes longer than planned. We believe that the Economic Recovery Plan has many other facets and key areas apart from debt restructuring and debt sustainability. It would be good to heighten efforts and focus on other areas of the plan that would give us quick wins so that the economic recovery is not derailed.” She remarked.
The media briefing also reflected on other developments related to other key matters that include, the Energy Regulation Board (ERB) approval of ZESCO’s application to increase electricity tariffs, financial stability versus price stability, Unemployment in the country as well as Governance and corruption. Others were Reaction to 1st Quarter of 2023 Budget and Economic Performance presented by Minister of Finance and National Planning, Utilisation of CDF Funds, Government engagements with Professional Bodies and Training of Accountants and employing accountants not registered with ZICA.
On the Energy Regulation Board (ERB) approval of ZESCO’s application to increase electricity tariff, Zimba said in spite of the positives put forward to justify the increments, inadvertently, a higher tariff is likely to be passed on to the consumers by producers of goods and services thus increasing inflationary pressures and thereby negatively affecting welfare of the citizens.
She explained that controlling inflation, which is the core focus of the Bank of Zambia will also become a difficult task and may lead to further tightening of the monetary policy which will eventually negatively impact businesses.
She further implored the government to review the two-tier electricity tariff system where electricity tariffs are in general regulated and approved by the ERB on one hand and the mining tariffs on the other hand being implemented under the so called “Power Service Agreements” between the mines and government as a result, mining tariffs have been low and below cost of supply an arrangement that continues to be a source of grief for non-mining consumers who feel the tariff regime is unfair.
On financial stability versus price stability Zimba said the recent MPC statement reversed some of its earlier inflation projections of attaining a single digit, to a new forecast where it is projected that inflation will persist on an upward trend for the rest on 2023.
She said this is of concern and will have the effect of eroding some of the past economic gains note and may dampen growth, lead to increase in unemployment and raise the cost of borrowing further which is already at high sticky rates.
“We note that while the Central Bank is keen to execute its mandate to control inflation, we would like to implore them to exercise caution and ensure that they strike a balance to 9 ensure that there’s financial stability as well as economic stability during the implementation of their monetary policy actions.”
“We are further of the view that government still has a greater role to play when it comes to matters of job creation and therefore, government should be concerned with the rate at which unemployment is rising. If no practical policy actions are taken to tackle this problem, it will negate the good efforts of providing free education and high quality education to end up producing graduates that will find themselves on the streets and cannot start businesses due to the sticky lending rates and lack of start-up capital.”
She said ZICA, as a partner to government and a key stakeholder in promoting tenets of good governance and fighting all forms of corruption will take a keen interest in following up the implementation of the IMF recommendations in the areas highlighted in the report.
On the arrest of ZICA members at Ministry of Finance and Auditor General’s Office, Zimba said, “As ZICA we are closely following press reports on the matter concerning our Members at the Ministry of Finance and National Planning and Office of the Auditor General. As you may be aware, this is an active matter now under law enforcement Agencies for which the Institute awaits a final verdict. Once the outcomes of these cases are known and legally concluded, the Institute may issue a statement to that effect.”
Zimba also called upon the Government to continue promoting transparency, accountability and continued strengthening of internal controls in the utilisation of CDF funds as constituencies now have a lot of funds to manage starting this year which is a big risk.
“I further wish to commend Government for giving professional Institutions like ZICA an opportunity to give professional advice on economic and national matters. We further urge the government to strengthen its ties with professional bodies in order to foster economic development through dialogue. We are of the view that constructive relationships between professional bodies and the institutions of government are not only desirable, but necessary and viable as it is likely to lead to more equitable, sustainable public decisions and improve the lives of the local communities.”
She added that, “ZICA continues to work with approved Tuition Providers in the development of work-ready Accountants, Taxation specialists, Public Sector Financial Management specialists, Business and finance leaders. We would like to implore the public to employ these graduates in finance roles as they are trained to uphold public interest by being gatekeepers of public and private assets.”
