LUSAKA, June 10 - Secretary to the treasury Situmbeko Musokotwane says Government prefers to deal with the International Monetary Fund (IMF) and the World Bank because of their cheaper credit facilities.
Dr Musokotwane was submitting before a Parliamentary watchdog committee on economic affairs and labour chaired by Pemba MP David Matongo (UPND) in Lusaka yesterday.
He said the conditions of the two international lending institutions were affordable to Government as they entailed paying back after a longer period of time.
He said it was important for the country to maintain the cheap sources of credit facility with the two international financiers to help sustain the country.
He said export earnings were not sufficient enough to attract foreign exchange for Zambia and that it was, therefore, vital that the country remained on the IMF and World Bank programmes for development.
"Its important that this source of cheap credit with the donor community is maintained and that we should continue to be on the IMF programmes. But the issue of good governance is also cardinal for Zambia to gain donor confidence," he said.
Dr Musokotwane reiterated Government's stance on reduced borrowing which was currently under 2.0 per cent of the Gross Domestic Product (GDP).
He attributed the high levels of borrowing by the Government in the previous years to high interest rates but stressed that the trend had now changed.
On money owed to local suppliers of goods and services, raised by Munali MP Edith Nawakwi (FDD), Dr Musokotwane said a swift mode to pay off the debt needed to be instituted to solve the problem within time.
He said it was regrettable that Government had incurred a lot of debt amounting to K400 billion from the local suppliers without putting up measures to clear the debts.
Dr Musokotwane said the current arrangement where Government only paid K60 billion each year to the suppliers was not favourable as the debt would take time to be dismantled.
He also noted that the diversification policy of the economy had lessened Zambia's over-dependency on copper for foreign exchange and that it added value to reviving other sectors such as agriculture.
The committee, however, called on the Government to institute deliberate efforts that would help boost the small-scale mining sector.
Mr Matongo advised that the small-scale mining sector should be exploited in the same manner Government did in revamping the agriculture sector.
He said currently, miners in the small-scale sector were not receiving support from Government and that much more needed to be done to help boost the sector.