Accountancy body calls for enactment of law to operationalise sinking fund

The Zambia Institute of Chartered Accountants (ZICA) has called for the enactment of a legislation to operationalise the sinking fund.

ZICA President, Cecilia Zimba, said the proposed legislation would spell out measures that would protect the fund from the likelihood of being abused by the leadership when they need funds quickly in times of crises.

Zimba told Zambia Monitor in an exclusive interview that the proposed legislation should guide as to when the fund was to be appropriated, and invariably applied, under proper direction.

She said the primary purpose of the fund would be to retire redeemable public debt of the country instead of resorting to default or generosity of the G20 countries and other lenders or indeed increasing taxes.

“An appropriate arm of government should establish a sinking fund henceforth by setting aside revenue over a period of time to fund future capital expenditure, or repayment of a long-term debt,” Zimba said.

She said government through the Ministry of Finance and National Planning should give this proposal a priority as part of its strategy in sustainable debt management.

“Further legislation could also place the administration of the sinking fund in the hands of an appropriate commission or authority,” Zimba said.

She further proposed that government should consider an increase in taxes gradually and systematically for the sole purpose of utilising the additional tax revenue to ensure to reduce the national debt by a certain predetermined amount.

Zimba said the money could go into the proposed sinking fund.

“Enact laws that establish guidelines and operationalising of Zambia’s sovereign wealth funds, It is an open secret that Zambia is a rich country in many respects and it is specially endowed with an abundance of natural resources,” she said

Zimba said history had however shown that the country’s resource management had not benefited all Zambians and was still at risk of depriving the future generations if prudent steps are not taken now.

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