DEVELOPMENT Bank of Zambia (DBZ) board chairman Noel Nkoma says there is a potential risk of the inflation rate getting out of control due to current happenings in the global economy.
And UPND chairman for energy Charles Kaisala says while his party stands by its campaign promise of reducing the cost of fuel, the pump price was currently high due to the global crisis.
Speaking on Ubuntu YouTube channel’s current economic situation in Zambia programme, Wednesday, Nkoma said the government was putting in place measures to mitigate the impact of the rise in inflation, should that happen.
“If you have also noticed, in many countries including the UK, the inflation rate is going out of control. And what I was trying to say as a reference point is where we are as today we have managed so well and there is a potential risk of inflation getting out of control for the simple reason that these are challenges that are beyond us by the virtue of the fact that we are connected to the global economy. And what happens at the global economy has a pass through effect in as far as Zambia is concerned. So yes, there is a risk that that may happen. But again, let us not forget that, you remember the credit crunch which happened during the time of president Rupiah Banda, may his soul rest in peace, at the time, our minister of finance honourable [Situmbeko] Musokotwane was a minister of finance. At that time, Zambia somehow was insulated from what was happening in the global economy as far as the credit crunch was concerned. So we are not saying it cannot happen but we think that under the current economic management framework, I think there is some contingency that is being put in place to ensure that if at all there will be any impact, it will be as minimal as we can,” Nkoma said.
He said the war between Russia and Ukraine had slowed down efforts to reboot the economy.
“Had it not been for the geopolitical issues in terms of the Ukraine war, we were now at a stage when we were going to begin to reboot or recalibrate the economy because stability was almost achieved. We do not know what May will present itself with [in terms of] the geopolitical tension or what June will present itself. But according to the government programme at the stage that we have reached, we are saying by June, we now begin to deliver the real benefits in terms of the economic dividends. Meaning one, we were now in a position to be able to scale spending by government because government been the largest consumer of goods and services and for the economy to grow, consumption has to be escalated,” Nkoma said.
“How do you do that? Government has to begin to scale up its spending appetite by being able to support infrastructure projects, other social economic projects in the rural areas and get the SME empowerment programme back on track.”
Nkoma said the IMF programme would present the country with a lot of opportunities.
“As we are talking, the minister of finance and his team, which includes the Bank of Zambia Governor, had meetings with the IMF today at the spring in the spring summit. We as a country have done more than what we can possibly do to be able to secure what you call an IMF programme. We are saying to ourselves, this is going to open up so many opportunities for this country. Number one, our credit worthiness will improve. Those who were looking at us as a failed state in the past are going to have a re-engagement with Zambia. That basically will result in what you call access to cheaper and long term financing to be able to rebuild our economy,” said Nkoma.
“We have begun to rebuild our economy, we restored confidence with our cooperating partners, with our donors and our lenders to the point that our debt sustainability strategy has been accepted and adopted by the IMF.”
And asked on the campaign promise of cheaper fuel, Kaisala said the party stood by that, but argued that the global situation at the moment could not support that direction.
“Yes we stand by that but we have a global crisis. Our lady (caller) just talked of Canada, Canada is one of the top producers of oil, I think it’s number five or somewhere there. Now if those people can have price increases, what about us who don’t have anything and we are land linked or landlocked?” asked Kaisala.
“There is a bit of politicking in some of these things because you see there is somebody, one politician who said fuel in Zambia can land at K6. That is politicking because one, we are a land locked country. When you put in the cost of transporting the fuel from Dar-es-salaam or Beira, there that is part of the cost component that the pump price a person has to take care of. So now if somebody can say K6 per landed cost, that is purely politicking.”