THE positive improvements in the country are being engineered and do not indicate that the country’s economy is becoming healthy, says CSPR executive director Patrick Nshindano.
And Nshindano says it seems finance minister Felix Mutati is the only top government minister who is serious about cutting down on government expenditure to contain growing fiscal deficit.
Nshindano said the vulnerable people were most likely to get hit by the economic recovery plan “just like when the elephants are fighting it is the grass that suffers.”
He said there was need for the government to refocus its priority by reducing wasteful expenditure and at also enhancing domestic resources mobilisation.
“This is because government has no money and they need to raise funds and so, one of the things that they need is what are the measures they need to put in place to be able to raise those funds and those are some of the tax measures you have seen which include the issue to do with the PAYE threshold,” Nshindano said when he featured on the Radio Phoenix breakfast show last week. “So, government is busy looking at ways to raise funds because they cannot go and borrow now especially on the commercial front; it has become extremely expensive and if you look at our public debt, it’s almost around 60 per cent of GDP which is huge given low productivity we are in; we are in what one can term big trouble. So, we need to ensure we manage the economy very well.”
He said there was currently very little political will to contain government over-expenditure.
“If the Ministry of Finance is the one running a solo race, we will not achieve this and we have seen this a lot coming from the Ministry of Finance; so, all the ministries need to buy into this; politicians need to buy into this so that we reduce spending,” Nshindano said. “Most of the challenges we have as a country are to do with over-expenditure.”
He cited last year when the government expenditure expanded by 26 per cent beyond original budgetary allocation.
“These are some of the things they need to ensure they stick to and the Head of State needs to champion this cause otherwise it will just be another rhetoric,” Nshindano said.
He said the country’s economy still remained unhealthy despite recent improvements in economic fundamentals such as declining annual inflation rate and the projected increase in economic growth.
“From the macroeconomic perspective, there is a positive trend but also we need to realise that these were basically engineered macroeconomic indicators because it had to take a lot of interventions by the Bank of Zambia and not necessarily because of our economic health as a nation,” said Nshindano. “We need to ensure that we get back to that economic health where these fundamentals do not require rigid engineering on the part of the Bank of Zambia; reduced interest rates for borrowing. But as it stands now, it is quite difficult to redistribute of resources.” JC/News