Economist Trevor Hambayi has expressed concern over the government’s proposed K33.6 billion supplementary budget, particularly the decision to borrow K10 billion locally from commercial banks at an interest rate of 13%.
Mr. Hambayi noted that the 13% interest rate on local borrowing is significantly higher than the 6–8% interest rates on Eurobonds that Zambia previously defaulted on.
He said this when he featured on Christian Voice’s Chatback program on the topic, “state of the economy”.
“This local borrowing is more expensive than the Eurobonds the nation defaulted on,” said Mr. Hambayi.
He further criticised the intended use of the borrowed funds, warning that channeling the money towards consumption rather than productive sectors could have long-term negative consequences.
“The other detrimental part of this local borrowing is that the money will be used for consumption, instead of investing in income-generating sectors that can stimulate economic growth,” said Mr. Hambayi.
Mr. Hambayi also questioned government’s fiscal strategy, urging for more transparency and a shift in focus towards sustainable, productive investments.
By Angel Kasabo.
