By Isaac Mwaipopo CTPD Executive Director
As his Excellency, the President of the Republic of Zambia, Mr. Edgar Chagwa Lungu sets to address the nation through the National Assembly during the forth-coming ceremonial opening of the fifth session of the twelfth National Assembly this Friday, 11 th September 2020, the Centre for Trade Policy and Development (CTPD) wishes to share its thoughts on some economic and social issues that the President should address.
Predictions about Zambia’s macroeconomy remain grim, compounded particularly by the COVID-19 crisis. IMF predictions point to a contraction of the economy by up to 5%.
Statistics from the Zambia Statistical Agency (ZSA) indicate that the economy contracted by 0.3% in the first quarter of 2020 alone. In addition, general prices have been rising, with inflation hovering around 16% in August, while a continued depreciation in the Kwacha hit a record high of K20 per US dollar on Monday 7th September 2020. Exports in the first quarter of 2020 declined by 15.1% when compared to exports in the corresponding quarter in 2019, owing largely to a decline in copper export earnings resulting from the plunging of both export volumes and average realized prices, constraining further the availability of foreign exchange.
Judging from these indicators, there are expectations that unemployment will rise as aggregate output contracts and cost of doing business goes up. With rising inflation, it is expected that living standards with deteriorate further.
In the face of this unpleasant economic outlook, we expect the President to bring a message of hope which speaks to these pertinent issues, particularly how the Government plans to steer the economy towards recovery. We expect the President to highlight categorically what strategies are in place to address the debt situation, specifically in terms of a plan of action on debt repayments and public expenditure. While we acknowledge the disruption that COVID-19 has caused to the implementation of the 2020 budget, the President will need to restore confidence in the business climate by pointing out unambiguously what plans are in place to promote domestic economic activity while ensuring that fiscal policies align with national priorities around economic recovery.
Further, as the economic impact- of COVID-19 crisis lingers, we expect the President to provide policy direction in terms of alternative channels through which the country can attract foreign exchange, to improve the country’s foreign exchange position and restore stability of the exchange rate. Although there might be pressure to print money given constraints on public revenue, caution must be taken, and instead attention must be given to export-oriented productive sectors. The agricultural sector provides an opportunity for export promotion, within and beyond the region. We recommend that the Government be specific and categorical in its support of the agricultural sector in the upcoming 2021 national budget presentation, pointing out precisely what innovative strategies will be in place to bolster production and productivity beyond the existing input support programmes.
Lastly, while we commend Government’s initiative to engage Civil Society Organizations (CSOs) and members of the general public in the development of the 2020-2023 Medium Term Expenditure framework, we also urge Government to consider seriously the submissions made by CSOs towards the 2021 national budget.