People’s Alliance for Change president Andyford Banda says the increase in the annual rate of inflation this year from 7.9 per cent to 8.3 per cent was anticipated, but Zambians should expect even worse next year.
And Banda says PF shouldn’t lie to themselves that all will be well in Zambia once the opposition keep quiet because everything that’s happening is as result of their wrong decisions.
The annual rate of inflation has leaped to 8.3 per cent, up from 7.9 per cent recorded in September, the highest on record this year so far, according to Central Statistical Office (CSO) data.
Announcing Zambia’s annual rate of inflation for the month of October, CSO acting director of census and statistics Goodson Sinyenga said the rise in inflation this month was largely attributable to price movements in fuel, lubricants and motor vehicles.
Reacting to the development, Banda said the increase in the annual inflation was expected, but added that Zambians should expect higher inflation next year on account of changes in the tax regime where VAT (Value-Added Tax) was being scrapped off in preference for the controversial Sales Tax by April 1, 2019.
He observed that this move was going to increase the cost of doing business and prices of commodities would go up.
“We have noticed that the annual inflation rate has increased and as PAC we know that this is expected. We are not prophets of doom, but we should expect worse because a number of things have happened in the country that will affect inflation as we go forward. One of the things that we should know is that, the changes in the tax regime where VAT is being scrapped off in preference for Sales Tax, is going to increase the cost of doing business and we should expect the costs of commodities to go up. What we should know is that a lot of companies and businesses that used to claim VAT are not going to claim that VAT anymore. Meaning that they will have to add that cost to the overall price of goods and services hence that will increase the prices,” Banda told News Diggers! in an interview.
“We should know that there is a high chance that mining companies, who had been depending a lot on the VAT refunds, will slow down on production come next year. Meaning there won’t be enough foreign exchange that will be coming in the country as the result of low production of copper. So, when there is no forex that is coming, we should expect the exchange rate to go up and once the exchange rate goes up, commodities like fuel prices will go up, which will cause the inflation rate to go even higher and costs of commodities to go up.”
Banda said the Ministry of Finance should have reconsidered the introduction of Sales Tax, saying if they went ahead with the implementation of Sales Tax over VAT, then worse inflation should be expected next year.
He said government needed to think about how best to sort out a number of issues in the country.
“Most of the donors have pulled out, meaning that the money that they used to bring in dollars and pounds, is not going to be available next year. That will definitely affect the exchange rate. Government needs to think about how best to sort out a number of issues. They need to have a round-table discussion with companies, with donors, to make sure that they meet some of the demands. Because there is no way we can jump from over-dependence and then tomorrow you say, ‘we will be fine.’ That is not the realistic way of looking at things,” he cautioned.
Meanwhile, Banda said everything that was happening in Zambia was as a result of wrong decisions made by the PF government, insisting that things would only be well when they started making right decisions.
“PF should stop lying to themselves that the opposition have to stop talking about issues for things to improve in this country. These are things that happening based on the decisions that they are making so there is no way they can make decisions and expect no consequences. They shouldn’t lie to themselves that when the opposition keep quiet, then that’s when things will start going right. Things will only go right if they make the right decisions,” insisted Banda.