Increased domestic borrowing will amount pressure on interest rates – Mutesa

Bank of Zambia kwacha
Bank of Zambia kwacha

The opposition Zambians for Empowerment and Development (ZED) has observed that the decision to increase domestic borrowing from 200 million kwacha to 13 billion kwacha will increase pressure on interest rates.

ZED president Frederick Mutesa says this is because it is lucrative to lend to government but that in the process the small and medium entrepreneurs will find it difficult to borrow from the country’s banks.

Dr. Mutesa notes this in turn will affect country’s small and medium entrepreneurs’ performance of their businesses.

Dr. Mutesa has also told Qfm news that increased domestic borrowing by the government will further in lead to a situation where debt servicing begins to compete with service provision such as healthcare and education.

The ZED president notes that such a situation will in the long run exacerbate poverty in the country.

The opposition leader has however observed that this is why government is being advised to manage the country’s resources prudently and mobilize internal revenue to the maximum to avoid borrowing.