Bank of Zambia Governor Denny Kalyalya
Bank of Zambia Governor Denny Kalyalya
GOVERNMENT and the Bank of Zambia (BoZ) should be commended for fiscal and monetary policies that have stabilised inflation and exchange rates this year, says economist Lubinda Habazoka.

Dr Habazoka said in an interview that much as 2016 had been a tough year, with inflation and interest rates increasing, Government should be commended for its efforts to reduce the two variables.

He however said tight monetary policies should form part of austerity measures in 2017.

“Government and the Central Bank should be commended for fiscal and monetary policies that have stabilised inflation and exchange rates.

“But what we should not forget is that tight monetary policies are austerity measures in a way. When citizens are unable to access funds, it becomes difficult for businesses and households to get resources cheaply for their use,” he said.

Dr Habazoka explained that Government should not proceed with its planned “debt refinancing programme” in 2017 to avoid tougher measures in the future because bonds were better refinanced when they were about to fall due.

“More debt accumulation will cripple our economy. Another US$3 billion debt will see the Kwacha trade above K18 per dollar as we might struggle to find forex to service capital market debt.

“Government should also be very careful with the toll gates currently under construction,” he said.

He said the best austerity measure was to cut Government spending and not increasing tax.

Dr Habazoka said increased taxes mostly affected potential for small business owners.

He explained that households should have been given a relief on taxes to increase consumption of goods and services in Zambia because increased demand will lead to economic growth.

“As we enter 2017, there is hope that the Kwacha will stabilise as mining activities increase amid bullish metal prices spearheaded by Trump’s promise to increase infrastructure development in the USA,” he said.

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12 COMMENTS

  1. People don’t eat exchange rate, work on inflation and the country economy as a whole!! This manipulation of numbers behind a keyboard to appear as if you have a strong currency while the economy is heavily bleeding inside!!! So stup!d

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    • Dr. Habazoka, the recommendation to reduce taxes to stimulate consumption to spur economic growth, neglects the fact that Zambia is a net importer. Increased consumption will only increase importation of goods and services.

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    • THE BEST WAY TO CONTAIN INFLATION IS TO BUILD FACTORIES IN ZAMBIA AND NOT MALLS WHICH ARE A CONSTANT DRAIN ON OUR FOREX BECAUSE MOST OF, FOR EXAMPLE, WHAT SHOPRITE SELLS IS IMPORTED. IT’S WORSE FOR OUTLETS LIKE EDGARS AND WOOLWORTHS: WHERE 100% IS IMPORTED!!
      THE MINES ALSO MANIPULATE THE EXCHANGE RATE. THE MORE THE KWACHA DEVALUES THE MORE KWACHA THEY MAKE TO PAY ZAMBIANS WITH THE DEVALUED CURRENCY.
      GOVERNMENT SHOULD CONTROL ALL THIS MISCHIEF!!!

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  2. The micro economic environment for our economy has been shady to the least. Stabilizing inflation and maintaining the exchange rate are not a prerequisite of a growing economy which has crowded out small and medium business from accessing funds for expansion. If truly these policies were working, why have they not gone down now that the price of copper is high as compared to the period before austerity measures were put in place.
    Its high time we became realistic as a country and be serious with the way we run our economy. Mangufuli, a chemistry teacher and lecture has turned the fortunes of Tanzania in one year and we are all able to see the results. What is really wrong with us? Cutting expenditure is the correct route for economic emancipation, let us be frugal and be sincere with…

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    • It’s not ‘Micro’ its Macro economic environment. Bush economic analysis are reminiscent of the dismal science economists of the 18th century.

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  3. continued: what we are doing and not this empty rhetoric. We seem to have lost our bearing concerning our economy. Taking an example of Tanzania, they have not borrowed like we have but they have harnessed the local resources to boost the treasury and are able to offer free education from grade 1 to 12. In short, let us cut on useless seminars, presidential travels, remove free vehicles for minsters, cut on free fuel,tighten controls on the use of government resources etc. The money is there but our priorities are lopsided or are at variant with our vision.

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  4. To compensate for PF incompetence and corruption, the citizens will have to pay by way of taxes on everything.

    PF are hopeless. Do you ever hear of them creating meaningfull jobs? They can’t even open up any simple assembly plant.

    Next PF will be looking at how to tax the air zambians breath. That is the only thing left that is free for now in Zambia, so enjoy the free air for now.

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  5. So we hard working poor zambians should thank BOZ fat cats for doing their job which we pay them for using our taxes? are you having a laugh? so i should thank my maid who i pay for cleaning my toilet? kikiki you are all penises

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  6. How come the IMF,World Bank and Rating Agencies do not agree with the govt of Zambia’s fiscal,monetary and Exchange Rate Policies? The exchange rate was stabilized at what cost? The cost of living has sharply increased,inflation has spiked etc. The macro-economic prospects In Zambia in 2017, with the visionless Edward at the helm , do not look good. Illegitimate Edward has no discipline and capacity to implement IMF reforms for growth in 2017. Time will tell!

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  7. “As we enter 2017, there is hope that the Kwacha will stabilise as mining activities increase amid bullish metal prices spearheaded by Trump’s promise to increase infrastructure development in the USA,” Dr Habazoka said.

    Mmmm? Based on Donald Trump’s promise? Now, there is something troubling when a supposedly educated and informed economist stakes his prediction on Trump’s promise. Let’s see some of Trump’s promises, and status to-date: –
    1. Repeal and replace Obamacare,….U-turn
    2. Build a wall along US-Mexico Border…. Only in some parts
    3. Deport undocumented Immigrants … No plan
    4. Appoint Prosecutor to Investigate Clinton … U-turn
    5. Temporarily Ban Muslims from entering the US … U-turn
    6. Get rid of NAFTA and TPP … U- turn
    7. Cut Taxes ……. No plan
    8. Resist climate change…

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    • Cont’d…..
      8. Resist climate change deals … No idea
      9. Tear up Iran Deal … No planB
      10. Renegotiate NATO …. U – turn
      11. Repair infrastructure … No plan.
      …….and he has not even taken up office yet.
      And someone is counting on Trump to keep his promise?

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    • Imwe!! Trump Ni Mbuzi, just wait and see the unfolding drama. Obama and George Bush will look like saints.

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