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The economy is facing some headwinds – Ng’andu

(By Edwin Mbulo and Masuzyo Chakwe)

 

TO KICK-START growth, we must take appropriate measures to deal, adapt, mitigate and reduce the risks associated with climate change, says finance minister Dr Bwalya Ng’andu. During the National Economic Summit in Livingstone yesterday under the theme “The future of economic diplomacy: supporting inclusive growth and sustainable development in Africa”, Dr Ng’andu said there was also need to improve liquidity in the country.

 

He said reinvigorating the diversification drive was another area of priority. Dr Ng’andu said the meeting was taking place at a time when the economy was facing some headwinds.

He said growth had been sluggish, mainly at the back of adverse weather conditions that have had a dampening effect on the agricultural and energy sectors, resulting in real GDP growth projected at around 2.5 per cent in 2019, down from an initial projection of almost four per cent.

 

Dr Ng’andu said liquidity conditions have been tight, adversely affecting businesses around the country and constraining economic activity.

 

“We have also encountered declining fiscal space for developmental projects as most of the resources have been utilised on debt service and other obligations that have a first call on the treasury. Developments in the international economy have also not been supportive. Global growth remains sluggish while risks to the global economy are on the upside, adversely affecting commodity prices including copper prices,” he said.

 

“These factors have culminated in negative market sentiments that in the second quarter of the year impacted negatively on the exchange rate of the kwacha against major convertible currencies.”

 

Dr Ng’andu said it was therefore gratifying that the summit was being held at the time when there was need to make strategic decisions and choices on the challenges facing the economy.

 

He said there was need to reinvigorate growth, deal with debt vulnerabilities and ensuring debt sustainability, build back fiscal buffers over the medium term, improve liquidity so as to support SMEs and the private sector in general through dismantling of arrears, and ensure support to the social sectors and the vulnerable in society.

 

“My predecessors in the ministry laid a strong foundation on what requires to be done. Implementation is at the heart of all these pronouncements. That will be my key objective. We have also announced a number of measures aimed at slowing down the pace of debt accumulation, such as postponement and cancellation of debt, subject to discussions with our creditors,” he said. “The importance of frontloading fiscal adjustment, including the expansion of the revenue base is another important area. Addressing the challenge of domestic arrears, and enhancing external buffers, are other areas for which government has devised appropriate policy responses.”

Dr Ng’andu said the government was also aware of the importance of undertaking policy, legal and structural reforms in the energy sector, and the procurement systems.

 

He said this was to increase investments in energy production, which had proven to be a constraint to growth in the recent past.

Dr Ng’andu said enhanced procurement legislation was aimed at changing the focus from processes to actual value for money when goods and services are procured.

 

“We are also working on improving, in the shortest possible time, the public appraisal system,” said Dr Ng’andu.

 

And national planning development minister Alexander Chiteme said by 2030, people should live in a technologically proficient country that is fully able to adapt, innovate and invest using its human and natural resources.

 

Chiteme, in a speech read for him by

permanent secretary – Development Planning and Administration Chola Chabala, said the country was slightly over the mid-term of the vision 2030 and two and half years into the implementation of the Seventh National Development Plan.

 

“On the whole, we are making steady progress. Actual performance towards full implementation of the plan stood at about 23 per cent by the close of 2018. At this rate we are likely to achieve 57 per cent of the set targets by 2021,” he said.

 

“Though this level of achievement might not be as inspiring as was desired, it is better than what was attained in the previous national development plans, where far less than 50 per cent of the targets were met. Nonetheless, we elect to work towards a higher level of achievement.”

 

Chiteme said substantial gains have been made in areas that were expected to positively impact on growth which include infrastructure development in the area of transport, energy, communication, health, and education sectors. He said similar gains have been made in health with the reduction of maternal mortality rates from 398 to 252 live births per 100,000 live birth and reduction of stunting and child mortality rated from 40 to 35 per cent of the population and 31 to 19 per cent respectively.

 

Chiteme said further strides have been made in the policy, regulatory and institutional frameworks supportive of good governance, financial management, public investment management, statistics and monitoring and evaluation.

 

He said the journey towards the Vision 2030 has not been one without challenges.

 

“Among them has been constrained fiscal space, in part, due to domestic resource mobilisation not growing commensurate with the demands to actualise the aspirations of the vision,” Chiteme said.

 

He said another challenge has been climate variability characterised by extreme weather conditions such as droughts, rising temperatures and unpredictable rainfall patterns.

Chiteme said the impact of climate change had adversely affected growth in energy and agriculture sector with decline in growth of 2.6 per cent and 7.2 per cent respectively.

He said more recently the 2017/2018 fluctuations in weather patterns would continue to affect crop and livestock production, leading to food deficits in the country if left unmitigated.

“The same drought has also negatively impacted the country’s electricity generation capacity, leading to rationing of power which is affecting the performance of industries, particularly micro, small and medium scale enterprises,” said Chiteme.

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