The Ministry of Health recently pointed out that the country is now into the third wave of the COVID-19 pandemic, amid compounded pressure on the health and economic front.
The ministry indicated that the wave would be a major impediment and called for continued adherence to health measures.
Though revenue performance improved in the first quarter, fiscal pressures remain, high expenditures on fuel imports, third wave, foreign and domestic debt are key impediments.
Meanwhile, the Bank of Zambia says over the medium-term, gradual fiscal adjustment premised on expenditure rationalisation and the significant increase in domestic revenue is envisaged.
In this regard, the announcement that substantive understanding has been reached on the macroeconomic framework between the IMF and the Government, the impending one-off allocation of SDRs by the IMF to help countries fight the COVID-19 pandemic and improved copper earnings are important developments that can help in creating the much needed fiscal space.
Apparently, according to the African Development Bank, the economy of Zambia fell into a deep recession due the adverse impact of the COVID–19 pandemic. Real GDP contracted by an estimated 4.9% in 2020, after growing by 4.0% in 2018 and 1.9% in 2019.
While the bank said the economy is projected to grow by 1.0% in 2021 and 2.0% in 2022, underpinned by recovery in the mining, tourism, and manufacturing sectors, copper prices, the economy faces substantial risks of a third wave of the pandemic which is also impeding global economic recovery and stifle demand for copper.
The bank says the third wave undermines the revival of such critical sectors as tourism and manufacturing.
Meanwhile, on another note, the cost of running elections is also expected to have a negative bearing on the economy, amid reports that the ruling party has been splushing cash to citizens in suspected case of vote buying.
Critics alleged that the central bank has been printing money being used by the ruling party, as it tries to buy the citizens’ votes ahead of the polls set for 12 August this year.