The International al Monetary Fund has charged that after a period of strong macroeconomic performance, the Zambian economy is now facing significant challenges.
The IMF said the challenges are arising from large fiscal deficits, lower copper prices, and policy uncertainties.
This is according to a statement from the IMF Executive Board after concluding their 2015 Article IV Consultation with Zambia.
‘In the last two years, the Zambian economy has been weighed down by large fiscal imbalances, lower copper prices and policy uncertainties. Real GDP growth has slowed, the current account has deteriorated, international reserves have fallen and the exchange rate has been under downward pressure,’ the Directors said.
They Directors estimate that real GDP growth slowed from 6.7 percent in 2013 to 5.6 percent in 2014, driven by a contraction in copper production.
‘Year-on-year inflation fell from a peak of 8.1 percent in November 2014 to 7.2 percent in March 2015, largely driven by lower fuel prices. The fiscal deficit on a cash basis rose sharply to 6.5 percent of GDP in 2013 and remained elevated at 6 percent in 2014.’
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‘The Zambian kwacha has fluctuated widely since the beginning of 2014. After depreciating by about 20 percent in the first half of the year, it recovered in the second half of the year reflecting tightened monetary policy and the issuance of Zambia’s second Eurobond in the amount of US$1 billion,’ they said.
The Directors emphasized that steadfast and strong efforts are needed to ensure macroeconomic stability and foster inclusive growth.
They underscored the need for significant fiscal consolidation in 2015 and over the medium term, to reduce the deficit, stabilize debt, and create conditions for lower interest rates.
The Directors also called for sustained expenditure and revenue efforts, including efforts to contain the wage bill, target social spending through cash transfers, broaden the tax base, and put the pension system on a sustainable footing.
They also welcomed the authorities’ decision to rescind the royalty based mining fiscal regime, and called for swift action to resolve the issue of outstanding VAT refund claims to exporters.
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‘Directors noted that Zambia’s moderate risk of external debt distress calls for prudence in borrowing on commercial terms. Recognizing the need to address infrastructure gaps, they advised the authorities to strengthen the project selection process and prioritize capital spending,’ the statement read.
They also called for the development of a comprehensive debt management strategy to help address public debt vulnerabilities.
‘Directors supported the commitment of the Bank of Zambia to maintain a tight monetary policy stance to contain inflationary pressures. They stressed the importance of continued exchange rate flexibility and rebuilding reserves to provide adequate buffers for the economy.’
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The IMF Directors also noted that poverty remains high, particularly in rural areas.
‘To foster job creation, inclusive growth, and economic diversification, Directors encouraged the authorities to improve the business climate by restraining labour costs and ensuring a stable regulatory environment,’ the statement said.
Ifintu ni Lungu, nangu tulechula and have no hope of our lives improving
To the enlightened the result is all too predictable, watch for more trouble, you have seen nothing yet. As they say experience is the best teacher for fools!
Answers have been given by IMF why our economy is unstable, it’s up to the government of the day to do something. Policy uncertainty is where the future of way of government policy is uncertain, my fellow PF members if we want our party to rule for more than 100 years let’s not just shout “Ifintu ni Lungu” when we see problems we are not to hid them, but table them. After we criticize our government they will realize that things are not ok and work on the weaknesses. The economy is bad bane.
One would think this article was articulated by HH because these are things HH has been singing since PF came to power. Let the id1ots now shout pabwatoooooooo!
Bufi, IMF only wants to give you more Kaloba!
@ Nubian what do you use to think. Oh! I stop here lest i insult a someone.
These are big key issues observed by IMF. The Govt seems not to have a clear plan on the economy and has seemingly lost its grip on the economy. The saddest part of it all is that people continue to sing “ifintu ni Lungu” thereby blinding Lungu to think that all is ok. If Lungu appoints a woman as Vice President then you hear cheers “working president”. And you will never hear the president’s specific comments on debt management, on excessive borrowing and infrastructural gaps. In short, the presiding remains mute on key issues affecting economy. All we hear are his general comments just like an ordinary person from the compound would also comment.
IMF is EVIL. They cause all these problems for Africa then turn round and say you’re not producing more for export. These exports which are cheaper only benefit the West and the little money earned is in turn given back to IMF as loan repayments. making you Africans even poorer.
What did the infamous Structural Adjustment Program achieve?
Poor countries must export more in order to raise enough money to pay off their debts in a timely manner.
They control the price of raw materials, they control your economies. Nothing much your leaders can do about it really. You can blame you leaders all you want, fact is they are helpless.
Illuminati
Is it IMF that borrowed 2 eurobonds, increased civil servant salaries, created districts and went on a spending spree??? Lets be serious please, if you know the IMF controls all the things mentioned above, then the government would have been much wiser and not excessively borrowed or try to develop the country in a short period on projects that won’t yield money.
The World Bank has not said anything not known to Zambian economic advisers. They have said what politicians in government do not want known to the majority of citizens because they practice politics of appeasement. Highlighting these issues to citizens is to loose popularity and subsequently the air conditioned offices and private jet travels. That unfortunately won’t be allowed to happen without real drama . The future of young Zambians is uncertain; ironically, they have the vote ace up their sleeves but will be not be awakened to it and will continue to wallow in poverty.
One only wishes the citizens would be enganged and asked like the first MMD rally asked in Kabwe. ” Are ready to sacrifice for the better future of Zambia?” And everybody chorus “Yes”. The would still get…
@ Misango Yaba Chaimani
“…they practice politics of appeasement…” or they practice politics of deception?
Poor civil servants, things look bleak for you with regards your wages. On another note ABC has overstayed in a position he clearly can not manage, he must go..infact the whole lot must go.
Quit playing the blame game and realise that as long as your leaders are inept we will continue suffering. I urge you to travel the continent and see success stories like Rwanda. They have clear and realistic policies and strategies of where they are going and these are implemented with political will.
The real issue is what have we seen in Chikwanda that we have not seen in Magande. Chikwanda was born we a sound external reserve. Were is it now? Magande has to straggle HIPC but he managed to put the economy on track.
?@Chils, It is like you are not able to make differences between poverty and riches, the more reason you react like that. You have never crossed Zambian bounderis to visit other countries and you are not worth a human being. because human beings endevour to progress in life and leave the world better than they found it for their future generations. Apparently you are among the majority in Zambia who have such a view. We can just say go ahead and live in poverty. I encourage all well meaning Zambias to have some introspection whether you are a doing a good service to your children by living under such condtions of HAND to MOUTH. You can not even save a bit of money for your children to go to school. Zambia in its current state is living in HELL under your Ifintu Ni Lungu. No economic strat
IMF are leaches. They only survive because of poor countries like Zambia. IMF are the new colonizers of third world countries. They should be not allowed to operate in Zambia or whole of Africa.
EL is a failed experiment. The only thing he knows is appointing people and travelling. We have not heard anything about the economy from him. He rans a bloated cabinet ,permanent secretaries and no fiscal displine. We are really in trouble with this guy.
HH did mention a need for debt management strategy. We won’t manage to rely on copper or debt relief we must find a more sustainable way to run the country and leaders that are not in it for sake of survival. That job requires a strong man. I still think diversifying into agriculture and building industry around that will help massively. Building stadiums and universities that the majority of Zambians can’t afford was ill-advised.
Kolopa.com! State funds have been mopped(kolopad) through corrupt transactions by those in power.
Zambia is a nation of failed leadership, a failed state, so shameful. Every one’s eyes is now focused on this genuine banana republic wondering how in hell it’s possible for a country so rich yet so poverty stricken at the same time. A paradox. Poor countries, barely coming out of war ashes but who suddenly are busy outshining and out performing a ‘peaceful’ and rich Zambia, endowed with all the resources it needs for unparalleled development. To rank at the bottom pile of the poorest of the poor in the world tells me something is catastrophically wrong with Zambia’s leadership. They should hang their heads in shame and bugger off already.
things were so much better under the supposedly ‘corrupt’ RB, but styopet Zedians believed in Membe’s lies and risked everything by voting in Sata!
Symptoms of our sick economy is all over to see and being wxperienced by the most empovarished section of the poor in Zambia. Unfortunately, PF leadership like the founder of PF late Sata belived drowth in economic activities in a nation is through mere politicking. Cause massive by elections to result in economic growth was/is the main PF theme of growing the Zambian economy.
Today, Kambwili claims is determined to develop N/W province. Such hollow statements is laughable, wonder if Mongu modern stadium is completed as a score of development in western province.
Change of effective leadership in Zambia is only solution for turning the sick economy of the nation.
Ifintu nafiLungula…!
2016 let’s try HH
HH is not the solution; Joint effort from all Zambians is the only solution.
“Christine Lagarde (IMF boss) is HH’s girlfriend. They are both bitter. They can’t accept that ECL is ruling. He is the CHOSEN one. Ifintuuu….” Statement by Sunday Chanda.
ECONOMY YAVUTA
BOMA YA BROKER
ECONOMY YAVUTA KEKEKEKE! !!
ITS FUNNY HOW THE VERY THINGS WE WROTE ABOUT ON THESE BLOGS MONTHS AGO ARE THE SAME CONCERNS RAISED IN THIS REPORT.
THE WAY THINGS ARE? RIGHT NOW UNDER PF?
AAAHH TAFILI BWINO!!!!
ECONOMY YAVUTA! !!!
Am so scared at the rate things are going I hope we wont go back to the KK era.
I find ECL not man enough to turn things around, not even HH. For a change let us give chance to military rule, we have a lot of educated and committed military officers in Zambia that can bring change mainly due to the emphasis on discipline. Any one found stealing public funds will be shot dead, no kaponyas in the streets, bring curfews so that there is no booze all over the show as this is what makes most Zambians fail to save but they keep scheming deals at work places and street corners. We are tired of these visionless politicians, imagine building a stadium instead of a factory! Every week permanent secretaries are appointed to go and fa*t and snore in the offices driving posh cars meant for business executives. Sick at soul!!!
The real and nominal Growth reconciling growth in that GDP deflector to inflation rate above and national accounts
Comment and give alternative growth methods and funding solutions to ensure sustained growth
Because of A B is the course of auction in funding and operational effectiveness unwinding the current and given the current National Aggregates where x-m in that is projected to be in the negative and investments in FDI pantry to ensure short-term rewinding to refinance and register real GDP within that policy framework targeting that rate in inflation and interest rates
@William Tekere Banda
IMF does not cause problems, it is countries like Zambia led by a bunch of *****s that get into problems by themselves. The IMF has done you a huge favour by carrying out a stress test, and highlighting the significant headwinds the economy is facing.
You bet, no action will be taken to deal with these issues raised in the report. If these issues are not addressed, Zambia is headed into the abyss.