Editor's Comment

New tidings on horizon for Zambia

THERE cannot be a better New Year present to citizens than the assurance by Government that the economic prospects are bright and inflation is projected to remain in the range of six to eight percent.
The Ministry of Finance has also assured that in 2019, macro-economic stability is projected to be sustained, aided by continued implementation of reforms and policies to support delivery of fiscal consolidation for sustainable and inclusive growth.
That is why President Edgar Lungu has urged Zambians to transit into this year with a positive mindset, renewed commitment and dedication to hard work to enhance national development.
Mr Lungu says patriotic citizens should seize every opportunity this year to engage in more rewarding, innovative and productive ventures to boost productivity at all levels.
He says despite the country having recorded some successes in 2018, a lot more still needs to be done to achieve prosperity for all.
Given the initial economic challenges the country faced before the appointment of Margaret Mwanakatwe as Minister of Finance in early 2018, there is need for Government to be hands-on where fiscal policy is concerned.
There still remains a huge expectation that Zambia is not yet out of potential distress on its external debts.
Zambia’s creditors, particularly those who participated in the Eurobond, believe that without any significant debt restructuring, possibly in the form of refinancing, the 2022 obligations of the first bullet payment of the bond will continue to affect macro-economic stability in years before due date.
On one hand, our interest rate payments remain too high for effective fiscal consolidation because the treasury will still fall short of resources to finance domestic budgetary needs.
It is for this reason that the International Monetary Fund (IMF) programme remains the most feasible means of achieving budget targets and fiscal consolidation.
Government cannot guarantee fiscal discipline or effective implementation of austerity measures without the oversight of IMF.
With inflation anticipated to remain at eight percent, certain variables will need to be managed seriously for the country to achieve targets if the IMF programme does not take off.
To achieve this, Government needs to place a lid on emoluments, meaning it should not entertain salary increments outside the rate of inflation.
Second, the Zambia Revenue Authority should collect taxes as planned, meaning any shortfall from the mining sector may spell a disaster.
There are good indicators though: industry is beginning to respond to the relative stability in interest rates although the headings posed by exchange rate may affect private sector growth.
Government should quickly improve the climate for portfolio investors to strengthen the Kwacha and this requires marginally increasing the monetary pilot rate.
We are very confident that we are now in that position where the economy is expected to start attracting investors as well as IMF for a programme, what with Moody having given Zambia a stable rating for the economy early in 2018.
In 2018, Government passed fiscal laws, a critical development which is a useful mechanism towards full application of the 2019 budget.
However, going forward, Government will need to fully stick to this commitment, follow its own laws and rely on parliament for most decisions affecting financial management and debt procurements.
Going forward into 2019, Government will have to manage three key risks that may create potential problems to the budget such as austerity commitment as mentioned by the Minister of Finance in the first half of fiscal performance review.
This would then assist Zambia on its path to fiscal fitness. A number of measures have been actualised and implemented and have resulted in huge cost savings.
Indeed, as the country enters the New Year, citizens should embrace President Lungu’s counsel with hearts of gratitude to God, who has made it possible for us to witness this momentous occasion.
It should be every citizen’s wish to be optimistic and continue building on the progress recorded in 2018.

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