Action Aid says the continued intervention by the Bank of Zambia to stabilize the economy is an indication of a waning economy.
“It is worth noting that in long time now, Bank of Zambia has announced a quarterly back to back increment in the monetary policy rate to curb inflation suggesting that monetary policy interventions are no longer helping our waning economy, hence, the need to go beyond the monetary policy,” says Action Aid Zambia Country Director Nalucha Ziba.
“Right now, we can conclude that Bank of Zambia has done what every central bank would do to respond to our current economic woes. It is high time we addressed the causes of our waning economy and not the symptom (Inflation),” Mrs Ziba said.
“It is clear that our skyrocketing inflation is cost induced due to among other reasons, the continued depreciation of Kwacha, Zambia being an import dependent country, the continued depreciation of the Zambian Kwacha means that we are paying more for the same imported goods earlier imported, henceforth, higher prices.”
She also mentioned the the recent fuel pump price increase coupled with the looming of more than 100% electricity tariff increment as some of the factors that have led to the increase in the cost of goods and services thereby pushing up inflation.
“Declining productivity; our GDP is expected to grow at 2%, the lowest ever in a decade; this is even worsening with current erratic power supply (we experience zero or negative economic growth), we are experiencing the worst ever load shading of possible, which is currently at twenty (20) hours in a day.”
Mrs Ziba said there has been enough of the monetary intervention adding that now it is time for a fiscal intervention.
“Public debt is our biggest problem now. Unsustainable debt levels without a clear debt management strategy is a thorn in the already struggling economy and deterrence to the investor confidence.”
“Additionally, high debt service demand has great bearing on our exchange rate, henceforth, slowing down in external debt contraction as well as postponing or cancelling of some pipeline loans to sustain public debt levels as announced by the Ministry of Finance during his 2020 budget speech is way to for now.”
“However, it is sad to note that contrarily to the emphasis on minimizing debt contraction government recently announced plans to borrow USD 2 billion for the construction of the Chipata Serenje Rail line. Additionally, Government must be involved and take responsibility by actualizing austerity measures.”
She added, “Though there has been too much emphasis on austerity measures, it would be good to know how much has been saved as a result of implementing such measures.”
Mrs Ziba said government also needs to prioritize expenditure on investments with high and immediate returns to spur economic growth.
“Among the expenditures to be prioritized is an expenditure towards the energy sector than road infrastructure.”