The Economist Intelligence Unit (EIU) has again projected that the Patriotic Front is likely to retain power in 2021 but warned that the government will become increasingly unpopular as a result of economic mismanagement and deepening autocracy.
According to its latest country report for Zambia, the EIU projected that PF would retain power after the 2021 polls but warned that the country would face substantial threats and simmering popular frustration over economic and political grievances, which might turn violent.
The run-up to the 2021 legislative and presidential elections will be an especially unstable period, during which a vulnerable government will narrow the political space aggressively and escalate crackdowns.
“The run-up to the 2021 legislative and presidential elections will be an especially unstable period, during which a vulnerable government will narrow the political space aggressively and escalate crackdowns. In late August, Zambia’s Registrar of Societies banned the National Democratic Congress (NDC), a small opposition party, which broke away from the ruling PF [after the 2016 elections]. The Zambian authorities are frequently accused by opposition parties of influencing the agency’s decisions. The NDC unsettled the PF in April by winning a by-election for the Roan Parliamentary constituency in Copperbelt Province, a PF stronghold. Its deregistration was therefore seen as an attempt to reinforce the ruling party’s hold on power. Such moves will undermine political stability by feeding into public fears that Zambia is staggering towards autocracy, exacerbating underlying social tensions. Another layer of potential risk emanates from the burgeoning influence of China in Zambia’s affairs, with growing popular suspicion that to secure debt relief, the government plans to sell key state assets to China,” EIU reported.
And EIU projected that Zambia’s fiscal policy between now and the year 2021 would remain unsustainable.
“We continue to forecast that spending will remain unsustainably high in 2019-21, albeit declining as a share of GDP from 2021 onwards, owing to stronger nominal GDP growth that year. In 2019-21, expenditure will remain driven by foreign-debt-financed capital outlays and debt servicing. Spending as a whole will drop significantly onwards from 2022, following elections in 2021.”
“Only in 2022, with foreign liquidity pressures mounting will capital spending be cut back, and high debt-servicing costs will continue to crowd out wage spending and subsidies. We expect revenue to fall in 2019 (in nominal terms) as an increase in mineral royalty rates (plus a new top rate), a delay in implementing a new sales tax until January 2020 and the scrapping of VAT rebates for mining companies backfires, with the sector reducing output. However, rising copper prices during 2020-23 will encourage a gradual recovery in production and raise overall revenues during the 2020-23 period (the slowing of the Chinese economy amid escalating global trade tensions represents a downside risk to this forecast),” EIU reported.