THE Socialist Party says Zambia’s economy is still in great danger and that the livelihoods of millions of citizens are at stake.
Socialist Party president Dr Fred M’membe recalls that the leftist party, at its press briefing early this year, advised the government to own up that the economy was patently failing.
Dr M’membe regretted that the PF government had ignored advice from the Socialist Party, resulting into severe consequences for the entire economy and the Zambians.
He was speaking at a media briefing at his office in Garden compound in Lusaka yesterday.
The media briefing was centred on sharing the Socialist Party’s concerns, fears, meditations and reflections on the state of the Zambia’s economy and: “what tomorrow holds in stock for our people, especially the poor.”
“We described the economic crisis as a national disaster of high magnitude. This description remains true today. We further stated that the PF government must also acknowledge their policies and actions to-date have greatly contributed to the difficult situation the economy finds itself in. In trying to find solutions a non-partisan approach was urgently needed. All Zambian stakeholders, including workers’ representatives, peasant associations, academia, political parties and movements representing the masses of our people have to be engaged in building consensus on the options for saving the economy from total collapse,” Dr M’membe said.
“Time is running out. Very clear, eloquent signs of a crisis already exist.”
On whether there was a way out of the frightening economic situation, Dr M’membe, an economist, said there is.
He said the economic solutions the Socialist Party offered early this year were still valid.
Dr M’membe outlined numerous actions the PF government could rely on to win back the trust of Zambians and international finance markets, on the helm of the economy for another two years.
Some of those actions, according to Dr M’membe, include maintaining a lean Cabinet, drastically cutting the allowances of the top leadership by 50 per cent, reducing the costs of international travel by 60 per cent, reversing the increases in salaries of all constitutional position holders and cutting the cost of running the government fleet by at least 40 per cent.
Others are cutting the bill for workshops and conferencing by 70 per cent and undertaking concrete governance measures that would point to a zero-tolerance approach towards corruption.
“The Socialist Party still recommends that external debt contraction and sustainability be a constitutional responsibility under close parliamentary scrutiny,” Dr M’membe said.
“There is need to embark on developing a legal framework that would constrain a sitting government from incurring unsustainable debt levels that have potential to destroy the entire economy.”
He lamented that it was a reality for Zambians that life was: “getting tougher and tougher and more and more unbearable by the day.”
“And we are here to warn that things will get worse by the end of this year and in 2020,” Dr M’membe said.
“The basic needs are unaffordable for many. Hunger, poverty, disease, ignorance, unemployment, lack of opportunity, insecurity, inequality, hopelessness are the terms that could well define the living conditions of a great part of our country’s population.”
He noted that factors behind the above vices must be interrogated and understood in order to develop appropriate solutions.
Dr M’membe added that solutions must not only be devised but also implemented.
“We have previously warned of the very high debt levels our country has contracted. And these high debt levels continue to grow to unsustainable heights,” Dr M’membe said.
“The country’s debt service burden is currently around 40 per cent. In simple terms, this means that on a monthly basis, the government uses 40 per cent of its revenues to pay debt and 50 per cent to meet its wage bill. This means that the government only has 10 per cent of its monthly revenues left to fund healthcare, education, infrastructure development and so on and so forth.”
Dr M’membe cautioned that if the government continued to operate in such manner, the country was headed for: “disaster, a very serious crisis.”
“It is therefore no surprise that government workers, including those working for quasi government organisations, have salary arrears. And if the government does not make changes to the manner in which it is operating, this will escalate, the situation will get worse,” he said.
“The government is currently cushioning this by paying workers their net pay while maintaining arrears in remitting pension contributions and payroll based deductions for loan repayments.”
Dr M’membe further spoke about the decline of the country’s reserves to 1.7 months of import cover, compared to two months cover in 2018.
“[This] is projected to reach one month of imports by 2021. This leaves little room to cushion external shocks. Bear in mind [that] the recommended minimum is three months,” he explained.
Dr M’membe predicted that “with drought affecting Lusaka and Central provinces, which account for about one-third of the national maize output,” production of the country’s principal food in this year was estimated to be roughly 55 per cent of 2017 levels.
On the banking sector, he said there would be contracted or reduced activity.
“In other words, banks will have to drastically reduce lending. And we know that a big portion of personal loans in Zambia is to government and quasi government workers,” Dr M’membe noted.
“As banks are already viewing this as risky for those with existing loans, this means that interest rates will remain above 30 per cent and possibly even escalate to above 40 per cent as was the case in 2016.”
He added that banks were there to maximise profits that, in turn, meant that many jobs would be lost in the banking sector before the end of this year and in 2020.
“There’s also the added risk of some banks failing to survive,” Dr M’membe said.
“Politicians and other leaders should become aware of this and see the problem clearly.”
Meanwhile, Dr M’membe pointed out that what Zambia was going through was part of a globalised capitalist crisis.
“The typical menu of capitalist solutions will not deliver. They are in effect a contributing factor,” said Dr M’membe.