Playing economy politics

THE tendency to relegate important national economic realities to political gamesmanship is a practice that must be condemned.

It is disheartening that politicians who should know better attribute negative global economic dynamics to endemic political exigencies in order to gain political mileage.

Reduced copper demand on the global market has resulted in lower copper prices which in turn has resulted in lower copper production.  It had been projected that production would exceed 800,000 metric tonnes in 2015 which has now been revised downwards to 708,265 tonnes in 2014. This was a 20 percent increase in production which has been revised downwards.

When the Minister of Finance Mr. Alexander Chikwanda tabled his mid-year economic and Budget review for 2015 to Parliament yesterday, very snide and disheartening comments regarding the downward revision of the estimated economic growth from 7.0percent contained in the original budget.

It was suggested, by some opposition parliamentarians, the revision was a result of economic mismanagement and yet the global economy has not performed any better.  There is a palpable economic slowdown in Europe, China and most of the emerging world which has had a direct impact on Zambia.

This has resulted in lower copper prices that have played havoc with Government revenues. More importantly the tax regime crafted in anticipation of buoyant prices has had to be revised to meet current exigencies.

There was no way that Government could have remained adamant in implementing a tax regime that would have led to the closure of some mines and loss of jobs.

Zambia is not the only country affected by a slump in mineral prices; many oil producing countries are in serious crises because oil has hit an-all time low.

It is also a reality that reduced Government revenue had played havoc with the massive infrastructure programmes that Government had embarked upon in anticipation of high copper prices.

That is why it is perplexing that Government intention to borrow externally to finance the project has come under attack with serious concerns of its ability to repay. This is in spite of assurance that our external debt burden is still way below the 40 percent of GDP.

There is really no alternative for the Government to mobilize resources to complete the projects. Borrowing locally will create a serious interest crisis for local business, because Government borrowing is preferred by investors who are assured of repayment. This results in crowding out local business, in addition to raising interest rates.

It is very important that politicians do not mislead Zambians who do not fully understand the dynamics of the global economy.

While liberal democracy is all about diversity, there can only be one truth and the truth is that the 2015 Budget deficit has ballooned from a projected K 8.5 billion to a staggering K 20 billion in the first six months of the year, because of many factors.

External borrowing to complete the remaining infrastructure projects is absolutely essential, but equally essential is the establishment of a sinking fund to ensure that the country is able to pay when time for repayments comes up.

Categorized | Editorial

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