Impeachment motion won’t erode investor confidence – Kanyama

Economist Chibamba Kanyama says the impeachment motion tabled by the opposition UPND will not erode investor confidence.

Responding to a press query, Kanyama said provided government focussed on stabilizing the economy, there would be no threat to investments.

He added that investors would only be worried about possibilities of policy reversal arising from political pressure.

“The only investors currently concerned about the political situation, such as the issue of impeachment of the President, are portfolio investors, particularly those who have participated in the Eurobond and government securities. I have been handling a number of these investors in the past week asking for my own assessment as to how the motion to impeach the President will pan out. These are not easy questions given where we are coming from as a country: stable and assuring. Investors are worried about possibilities of policy reversal arising from political pressure,” Kanyama said.

“I have, however, assured investors that ours is a maturing democracy with a number of issues yet to be put in place and I personally expect no threat to investment whatsoever. Provided government remains focused on stabilising the economy, reducing the government deficit, remaining upfront on the servicing of external and domestic debts, keeping inflation low and maintaining a realistic economic growth rate, investors will be confident and buoyant about Zambian prospects.”

And Kanyama said was in the interest of both the International Monetary Fund (IMF) and Zambia to conclude discussions soon.

“Zambia’s pursuit of a programme [with the IMF] is not closed and I am sure government will continue to pursue it as long as the country remains vulnerable to external shocks and the deficit remains high. The price of copper is relatively good at the moment and this should help government meet some of the conditions set by the IMF such as improvements in revenue and containment of debt. You may recall by the end of 2017, government had paid around $1 billion in external debt servicing, which marginally reduced the debt/GDP ratios. It is the high GDP/debt ratios that largely stand in the way of an IMF programme. I am very sure before the IMF and World Bank spring meetings some time next month, there should be some progress on meeting some of the critical benchmarks on the part of government as expected by the IMF,” said Kanyama.

“My view is that it is in the interest of both parties to conclude the discussions soon. At best, Zambia, being a member of the IMF, can also apply for a standby credit arrangement in case of unforeseen external shocks that could affect the balance of payment. It is also important to state that the political situation is hardly a determining factor to arriving at a decision for an IMF programme. It generally becomes an issue if rating agencies such as moody’s evaluate political factors or instability as a risk to the economy.”

         

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