FINANCIAL analyst Blessings Kafwanka says government’s efforts to rebuild and grow the country’s economy will be slowed down as a result of the geopolitical tensions between Russia and Ukraine.
In an interview, Tuesday, Kafwanka said the surge in crude oil might reverse improvements in Zambia’s inflation rate and impact negatively on the performance of the Kwacha against other currencies.
“The geopolitical tensions between Russia and Ukraine are impacting negatively on the global economy and will slow down government’s efforts to rebuild and grow Zambia’s economy. Like other countries, Zambia has not fully recovered from the effects of Covid-19. The price of Crude Oil has risen above US$130. With the introduction of the monthly revision of the pump price of petroleum products in Zambia, the effect of these external shocks will be felt sooner than later,” he said.
“The importation of petroleum products accounts for a significant proportion of Zambia’s imports and outflow of forex earnings. The surge in crude oil might reverse the improvements in Zambia’s inflation rate and impact negatively on the performance of the Kwacha against other currencies. It’s important for us, Zambians, to be aware of the effects of these global events. Not everything should be blamed on the government.”
Meanwhile, Kafwanka said a full IMF bailout package was critical to not only build confidence in the economy but to facilitate the restructuring of Zambia’s debt.
“Zambia’s first Eurobond, US$750 million, will mature on 20th September, 2022. The government will be required to settle its principal payment in full. Our Republican President has repeatedly said that our treasury is empty. I, therefore, think it’s unlikely for the government to meet this obligation when it falls due. Government must therefore continue working hard towards getting the full bailout package. A full IMF package is critical to not only build confidence in our economy but to facilitate the restructuring of Zambia’s debt and increase the likelihood of it being accepted in other debt assistance in the future,” said Kafwanka.