By Anthony Bwalya – UPND Member
On the issue of stimulating the economy through the COVID19 period, the United Party for National Development (UPND) and Mr. Hakainde Hichilema were unequivocally clear about what we needed to do:
1. Government suspend its unquenchable appetite for wasteful, non product public spending….and
2. Use the public debt service relief provided by both multilateral and bilateral partners to achieve and deliver the following business environment incentives:
a) Suspend VAT and PAYE for businesses for a minimum 6 months period, with the option of extending the relief period to 1 year. After all, government has been able to give prolonged tax concessions to multinationals spanning close to 20 years.
b) Accelerate power imports to mitigate the effects of prolonged loadshedding on SMEs
c) Reduce or suspend certain consumption taxes on fuel to lower the pump price for at least 6 months, with an option to extend.
The UPND had further proposed that government expands access to emergency financing for businesses by doing the following:
a) Government reduced the statutory reserve requirement for commercial banks from the current 9% to perhaps 6% or 7%…..and further
b) Reduce the monetary policy rate to around 9% – something the Bank of Zambia actually delivered.
The UPND were affirmative in our belief, that these measures could have gone a long way towards aiding our ailing economy through this incredibly difficult time; and Denny Kalyalya would not have lost his job.
BUT, President Edgar Lungu and the Patriotic Front (PF), in their predictable nonsensical fashion, announced a K10bn or around $560m of a “stimulus” package to help SMEs through the tumultuous COVID19 times.
This was K10bn which was meant to be printed by BoZ and given out to PF operatives in the name of “suppliers'” payments, effectively bankrolling the Patriotic Front political establishment. Remember, all major government supply contracts are currently held by PF cadres and their mafia friends in the private sector.
But since the announcement was made, and up to date, only K1bn or 10% of this stimulus package is said to have been “disbursed.”
It is infact for this very reason that the former Bank of Zambia governor – Denny Kalyalya was fired.
The question no one is asking is this: where was Denny and BoZ going to get K10bn to disburse to facilitate this “stimulus” package?
The problem with the PF and its entire leadership is that they are used and addicted to money that just materialises out of nothing. The kind of easy money where they have never had to lift a finger to generate, proceeds of criminal wrongdoing anchored on zero productivity.
The PF regime actually think that BoZ should be printing money to support their reckless exuberance around public spending.
Here is what Christopher Nvunga will have to do: either print the money the PF are after or break all central banking regulations and bring those foreign reserves to much less than $1bn.
Kalyalya did all he could. The PF were even lucky to get the K1bn of printed cash otherwise no central bank governor, especially not in an economy the size of Zambia with zero productivity, should ever have to print money for political reasons.