Zambia Central Bank Opposes Removal of Lawmakers’ Debt Oversight

(Bloomberg) -- Zambia’s central bank is opposed to proposed constitutional changes that include removing the legal requirement for parliament to approve new government loans.

The government, which presented the draft constitutional amendment bill to lawmakers in August, has accumulated external loans rapidly since 2012, prompting the International Monetary Fund to caution that the southern African nation is at high risk of debt distress. Bank of Zambia Governor Denny Kalyalya has also criticized the government’s fast-growing debt.

“National Assembly oversight is critical over these important public functions in a democratic dispensation like ours,” according to a Bank of Zambia presentation to lawmakers Monday. “The peoples’ representatives in parliament should have an opportunity to scrutinize the intended purpose(s) of any public debt.”

The planned constitutional changes have drawn widespread criticism from opposition parties and non-governmental organizations, including the Law Association of Zambia. The government needs two-thirds of lawmakers to approve the amended law, and a date for the vote hasn’t been set.

Other submissions by the Bank of Zambia:

• A clause requiring political parties to disclose the source of their funding should be retained, “especially in the fight against money laundering and terrorism financing,” and to prevent politicians from using proceeds of crime to fund their activities
• The government should drop plans to reintroduce posts for deputy ministers; that money will be better spent elsewhere
• The insertion of the word “primary” in a clause laying out the central bank’s purpose: “The primary function of the Bank of Zambia is to formulate and implement monetary policy.” The central bank says this is important because the amended constitution removes its responsibility for printing the local currency. The lender said earlier this year the function will be included in a soon-to-be-amended Act that governs it.

To contact the reporters on this story: Taonga Clifford Mitimingi in Lusaka at tmitimingi@bloomberg.net;Matthew Hill in Maputo at mhill58@bloomberg.net

To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net, Hilton Shone, Gordon Bell

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