• There is need for government to make intelligent decisions.
• Debt restructuring has created fiscal space within which government can operate.
• There will be enough liquidity for the private players to borrow.
Inter-Africa Governance Network (AFRINET) has advised government to restrict itself from a being a major borrower on the domestic financial market in view of the debt relief.
Speaking when he featured on Money FM’s Policy, Power and Money program, Network Executive Director Maurice Malambo said since the country will only start paying back its external debt three years from now, there is need for government to make intelligent decisions and do things in a different way.
Mr. Malambo stated that the debt restructuring has created fiscal space within which government can operate in terms of spending resources in the social and economic sectors, hence it should not borrow from the local financial market.
“Now that government has restructured debt, it means that debt has not been cancelled, the Payback period has been moved further to a period of 20 years, and also we will only start paying three years from now. So between now and the third year, and 20 years, we need to make intelligent decisions to do things differently from the way we did them prior to this tight fiscal space.”
“Government must restrict itself from being a major borrower again on the local financial market,” Mr. Malambo said.
He added that if government will show discipline in terms of its interaction with the local financial market, there will be enough liquidity for the private players to participate or borrow.
“That entails increased volumes of liquidity, that entails flexibility in the cost of borrowing, ultimately if there is a lot of money in the local financial market, and interest rates begin to fall,