Economist Francis Ziba has warned that Zambia’s economic outlook is currently “pitch black” resulting from a very toxic mix of power shortages, low currency reserves, high inflation and poor policies for managing sovereign debt.
And Ziba, the Executive Director of the Institute of Risk Management Zambia (IRMZA), has disclosed that the International Monetary Fund sees Zambia’s disruptive political environment affecting domestic growth.
He stated yesterday that what Zambia requires currently is a cohesive approach to avoid full blown debt crisis, “that’s if we [are] not in it already”.
“Last week, I had an opportunity to talk with a colleague of mine from my days at Lehman Brothers who now toils for the IMF. He was part of the IMF delegation visiting Zambia. If the palette of colours he was painting are anything to go by, then as a country, we are looking at black – yes, pitch black! They see a disruptive political environment which is aggravating the slow motion of stagnation of domestic growth. Power shortages, low currency reserves, high inflation and poor policies for managing sovereign debt just to mention a few. Put these together and suddenly the picture looks a very toxic mix,” Ziba stated.
He stated that the IMF team that concluded a visit to Zambia last week does not expect the Zambian government to go ahead with the bailout package with Bretton Woods institution.
“Most worryingly, they see Government as not committed to the bailout and that Government efforts lack the leadership it deserves. ‘The rhetoric is as embarrassing as that of a two-year-old!’, he exclaimed to me. But as a Zambian citizen going through the same hardship like most, I personally think we urgently need to recognize our collective and mutual interests in avoiding a full-blown debt crisis that’s if we not in it already. We may have other alternative options to the IMF bailout which I doubt, but there is need to embrace a cohesive approach towards development and tackling the debt problem which is slowly becoming a crisis for this country,” Ziba stated.
Zambia’s problems are not insurmountable, he stated, “but these challenges, if not addressed, have the potential to worsen the effects of unresolved structural issues”.
“The net result could trigger new economic and financial shock which could lead to serious instability for years to come. Some of us experienced the HIPC days even at a tender age and few could argue that the similarities today are clear for many to see. As an expert in economics and finance, I broadly do agree with the IMF prognosis. But where are the most serious flashpoints, and what can politicians and technocrats in the civil service do to minimize these risks? Government needs to accept and embrace the fact that we have sleepwalked into a debt crisis and we need to do whatever we can to reverse our policies before the time runs out,” Ziba stated, and highlighted that there are two lessons to learn from the current economic situation which are to “tackle our structural issues early, and align all our future borrowings to investment and not simply to finance budget deficits. If we as a country can make genuine progress on these fronts, situations like the current can hopefully be avoided in future…”