Patriots for Economic Progress(PEP) has said that giving the mines a de facto tax holiday at a time that copper prices are at record highs of approximately 11,000 dollars per metric tonne, was a very poor decision by the government because mines have been able to operate and make a profit when copper prices were at 3,500 dollars.
Mr Tembo says it is saddening that Zambia is not benefiting in any way from this windfall while at this point the country should have been leaping huge tax dollars from the mines.
Mr Tembo has advised the new dawn government to come up with homegrown solutions instead of depending on the International Monetary Fund–IMF- bailout package for the country`s economic turnaround, expressing concern that government has premised the entire economic plan on the IMF programme which he said if it does not come through will negatively affect the country`s economic recovery agenda.
Below is the full statement
FOUR MAJOR ECONOMIC BLUNDERS OF BALLY’s PRESIDENCY SO FAR
By Sean Tembo – PeP President
1. IMF BAILOUT: Believing that Zambia needs an IMF bailout loan in order for us to turnaround our economy. Additionally, Bally has premised his entire economic turnaround plan on the IMF programme, meaning that if the IMF doesn’t come through, he will be scuttled. The truth is that we can turnaround our economy by using homegrown solutions. Simply by stopping the theft of public funds, Zambia can double its revenue base.
2. TAX HOLIDAY: Giving the mines a de facto tax holiday at a time that copper prices are at record highs of approximately $11,000 per metric tonne, was a very poor decision on the part of Bally. The mines have been able to operate and make a profit when copper prices were at $3,500 which means they are now making supernormal profits with copper prices at $11,000. And yet the nation is not benefiting in any way from this windfall. Whether this decision was done in order to pay back the money which the mines funded UPND during its 23 years in opposition or it was just innocent incompetence, remains a matter of speculation. At this point we should have been leaping huge tax dollars from the mines, and we could’ve easily been servicing our debt obligations, including the upcoming Eurobond.
3. GOVT RECRUITMENT: In economics, when they say that employment creation is a key accelerator of economic growth, they do not mean government recruitment to suddenly ballon the civil service, no. They mean private sector employment creation. Am sure Bally wasn’t paying attention during his economics class at UNZA when this topic was being taught. So for him, when he became President he immediately committed to employing 40,000 plus additional civil servants, all at once, at a time when we have the largest fiscal deficit in history. A fiscal deficit means that your expenditure as a country is higher than your revenue. So the natural thing to do under those circumstances is obviously to either cut your expenditure and/or increase your revenue. But Bally is doing the exact opposite. He is increasing expenditure and cutting the revenue through the de facto tax holiday. What a poorly baked economist indeed.
4. SHUNNING LOCAL CONTRACTORS: For whatever reason, Bally has a strong apathy against local contractors and suppliers. My view is that he thinks all these people are affiliated to the previous regime. And therefore, since he wants to punish the previous regime as much as possible, he prefers to shun local contractors and suppliers in preference for foreign ones. A case of ZESCO poles tender is one such example. Bally has also decided not to pay a single local contractor or supplier since coming into office, under the excuse that he is still auditing them. This has destroyed the Zambian entrepreneurial base almost completely. Additionally, this has reduced the amount of money in circulation and also destroyed thousands of jobs. Right now, no matter what you are selling, the business environment is very poor. There is just no demand out there. All thanks to Bally and his desire to punish the previous regime.