GOVERNMENT has been insincere in attributing the kwacha’s rapid depreciation to the Coronavirus outbreak because the local currency was already losing value before the disease was first reported in December 2019, says ActionAid Country Director Nalucha Ziba.
In a statement, Ziba noted the severe impact the Coronavirus outbreak had on the global economy, but disagreed with government’s attribution of the rapid kwacha depreciation to the disease.
Ziba explained that the local currency had been depreciating since 2018 due to government’s imprudent public finance management, non-responsive fiscal policy as well as the huge debt servicing.
Last Friday, Vice-President Inonge Wina told Parliament during Vice-President’s Question Time that the kwacha’s depreciation was mainly attributed to the Coronavirus outbreak, without, however, clearly explaining how.
“From claiming the much-needed global labour force to the reduction of economic activities in all the global economic sectors, COVID-19 is not only the human tragedy, but also a global socio-economic sabotage. COVID-19 is a threat, not only to the already choked Zambian economy, but also the global economy at large as the result of aversion behaviours that may and/or adopted to avoid catching the virus both individuals and governments. However, it is sceptic and premature to attribute current economic woes and to the large extent the depreciating kwacha to the advent of COVID-19 as the pandemic was first reported in December, 2019; our economy was already suffocated and the kwacha already on free failing spree,” Ziba stated.
“In 2019, the Zambian kwacha closed at K14 (per) dollar, depreciating at an approximate rate of 17 per cent on the year-to-year basis since 2018. The kwacha has continued with the same trajectory in 2020 thus far. ActionAid Zambia believes Zambia’s ‘economic COVID-19’ is high public debt service cost, coupled with imprudent public finance management and non-responsive fiscal policy. The continued kwacha depreciation is largely attributed to high servicing debt costs, which has been worsened by the depreciation itself. This is on the backdrop of the shrinking economic growth (projected to growth 2 per cent this year) due to, among other reasons, high cost of production and/or doing business as result of the hike in fuel prices and electricity tariffs as well as low foreign reserves.”
She further noted that it was imperative for government to manage the economy for the benefit of Zambians and stop hiding behind the COVID-19 outbreak.
“Government has been insincere with fiscal policy economic intervention; failure to adhere to austerity measures, coupled with imprudent public finance management, among other things. It is, therefore, imperative for government to take responsibility as mandated to them by the Zambian to manage the economy for their benefit and stop hiding behind the outbreak of COVID-19. As mentioned earlier, ActionAid Zambia is, however, alive to the socio-economic impact and threat of COVID-19 is posing to the global community, Zambia inclusive. Already, many countries are in lock-down, social relations and the supply chains of goods and services are severely strained, among many other impacts,” stated Ziba.
“We, therefore, call on government to be up to speed in instituting public health measures to safeguard the lives of Zambian people. We also urge government to engage all relevant stakeholders to come up with COVID-19 socio-economic impact response strategy to assure the socio-economic resilience of the Zambian people in the already choked Zambian economy amidst this pandemic.”
Market data compiled over a one-year period from March, 2019, to March, 2020, shows that by last month, the kwacha’s performance was the worst-performing, having posted losses of 33 per cent, year-on-year, compared to the South African rand, which depreciated by only 13 per cent against the dollar during the same period under review.
Africa’s second biggest economy has recorded over 100 confirmed cases of the COVID-19, the highest on the continent so far compared to Zambia’s two that were revealed, Wednesady.