Chibamba Kanyama writes:
ZAMBIA ECONOMIC AUSTERITY
Congratulations to government for announcing austerity measures to help restore Zambia’s growing fiscal deficit. The effective treatment of every problem first calls for admission that such a problem exists. I do not think Zambians, with a few exceptions, are hellbent on seeking to destroy their own country. For a while now, the message has been that all talk about Zambia’s economy was premised on negative sentiment. This has been the creation of a few people making a living out of seeking to blind government about the realities of the economy. The truth is that investors are rational beings who seek to make decisions based on data and will hardly sway away from an economic opportunity on account of rumours. Even where such fake news exists, the truth usually emerges and it is this economic data released by government regularly (Ministry of Finance, Bank of Zambia, ZIPAR) which helps investors make financial decisions.
I should actually congratulate the Minister of Finance Margaret Margaret for having been very upfront and liberal on releasing economic data and regularly updating the nation on how we have performed. This has been the missing link for a while and it became the reason for speculative economic sentiment.
This fresh admission that the economy is in dire traits and that urgent action should be taken is another positive step towards restoring economic confidence in Zambia. The only advice I give is to urge the Government to align the austerity measures towards a possible IMF programme. As things stand today, it is very hard for government to manage its own austerity as it’s like asking a patient with a foot problem to amputate self. You can only cut that far and will stop when pain is unendurable. The IMF program is very painful medicine and some of those countries that took it never fully recovered because they failed to complete the dosage or economic diagnosis was erroneous.
In the case of Zambia, our able economists in government have done pretty well understanding the problem and have somewhat applied the Zambia Plus Economic Stabilisation Programme but only in part. An IMF programme does not only come with the discipline of implementation of austerity but a financial redemption package too, something we desperately need. There is also potential to unlock additional concessional packages as a result of IMF involvement. In any case, the decision made by cabinet yesterday is closely watched by the IMF and it may just be that step that brings government and the IMF to the negotiation table. These are my personal thoughts for my Facebook friends.