KABANDA CHULU, Lusaka
THERE is need to restore credibility to the budget to enable it to become a reliable national policy instrument that aligns other macroeconomic variables, World Bank Zambia senior economist Samson Kwalingana has said. And Atlas Mara Bank chief executive officer James Koni said the banking industry stands ready to respond to government policies and structure products to make people contribute to economic growth. Speaking yesterday at the Atlas Mara client breakfast meeting themed: ‘Recent developments in the macroeconomic environment in Zambia and the likely impact on the banking sector’, Dr Kwalingana said the need to build credibility of the budget cannot be overemphasised. “If you cannot control your fiscal policy then the budget as a financial policy, instrument becomes unreliable. For instance, if the target is to borrow six percent of gross domestic product (GDP), then you exceed to 15 percent it means challenges are created,” he said. “All macroeconomic policies have to be realigned to the budget and priorities should be outlined and expected to deliver outcomes within agreed time frame. Also, this calls for transparency and the importance of communication to help other sectors plan.Even if difficulties are envisaged, one will know how to navigate.” Dr Kwalingana said during the past few years monetary and fiscal policies were not aligned and economic growth was only supported by the services sector.
“By 2019, growth had already receded to 1.4 percent while inflation was in double digits with fiscal space being constrained and debts heading towards unsustainability. The average Zambian was worse off and agriculture, which absorbs many people, had declined and many people became poorer. “This was due to fiscal expansion that led to significant public debt increases thereby crowding out private sector borrowing since Government was also borrowing from the same market, and banks prefer to lend out to the State owing to low-risk profile,” he said. He said the country’s quest to close the infrastructure gap meant well but the challenge was with the means of implementing it. Dr Kwalingana further said that dependence on CLICK TO READ MORE