President Edgar Lungu could lose the 2021 general election if opposition political parties decide to form a broad-based coalition, says the latest Economist Intelligence Unit (EIU) Report.
And the EIU has predicted that Zambian government will fail to clinch the much-needed International Monetary Fund (IMF) economic bailout package due to continued heavy borrowing and weak fiscal policy.
Meanwhile, the Bank of Zambia (BoZ) is expected to adopt a tighter monetary policy stance, starting this month, when the central bank’s Monetary Policy Committee (MPC) meet to address the weak kwacha and high inflation.
In its latest country report published, Wednesday, the EIU has predicted that President Lungu could lose the 2021 general election if opposition political parties decide to form a broad-based coalition.
“Our baseline forecast is that Mr Lungu will win in 2021, albeit without any commanding margin and amid deep popular dissatisfaction. Nonetheless, this forecast could change if opposition parties agree to form a broad-based coalition,” the EIU stated.
The Report observed that the opposition political fraternity, especially the leading United Party for National Development (UPND) remain vulnerable, a situation which if allowed to persist, will help the PF to retain power.
“The Economist Intelligence Unit expects the election to be extremely tight. The PF will be under the spotlight for its patchy record on official corruption, as well as economic mismanagement, which will be a serious concern by the time of the election. The UPND is the most viable contender for the Presidency, but has become relatively directionless since the 2016 election. The opposition vote is also vulnerable to being split among different parties unless alliances are formed,” it stated.
The EIU stated that although President Lungu, being the incumbent, was likely to emerge victorious at the 2021 polls, Zambia would remain gripped by widespread political instability before and after the general election.
“Although the ruling PF, led by the President, Edgar Lungu, is forecast to retain power, Zambia will face substantial threats to political stability in 2019-23. Pent-up frustration could develop into violence at any time, given the widespread perception of worsening corruption, combined with the prospect of poor employment opportunities, fragile public-sector finances and fears of creeping authoritarianism,” the Report reads.
“In particular, unrest could break out when the Constitutional Court rules on whether Mr Lungu is eligible to stand for another term in the 2021 election; although the Court met in May to discuss the matter, it postponed a ruling and a new date has not been set. Mr Lungu has publicly warned the Court that there will be chaos if he is deemed ineligible for another term; however, as the President appointed the court’s judges, such a verdict is unlikely.”
It further warned that the run-up to the 2021 election would be another unstable period during which President Lungu’s government will again look to narrow the political space aggressively.
“Indeed, there are likely to be crackdowns any time that Mr Lungu feels his position is vulnerable; these in turn risk building resentment. Another layer of risk emanates from the growing influence of China in State affairs,” the EIU stated.
And the Report predicted that the IMF was unlikely to agree to Zambia’s much-needed US $1.3 billion economic bailout package due to continued heavy borrowing and government’s weak fiscal policy.
“Because the 2019 national budget includes plans for heavy external borrowing, we no longer expect the government and the IMF to agree on a loan deal within the forecast period. We now expect austerity to kick in from 2022—after a general election—at which point the budget deficit will begin to decline, but up to this point there have been substantial upward revisions to our forecast for the external debt stock,” it stated.
Meanwhile, the BoZ is expected to adopt a tighter monetary policy stance, starting this month, when the MPC meet.
“After a period of easing, the Bank of Zambia has held its policy rate steady at 9.75 per cent since February, 2018, to protect against budding inflationary pressures. With the kwacha under pressure and prices likely to rise relatively quickly as a result, we expect the BoZ to adopt a tighter stance at its next Monetary Policy Committee meeting in November, 2018,” read the EIU Report.
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