HH gives expert advise to PF Govt on ailing economy

Opposition United Party for National Development (UPND) leader Hakainde Hichilema has offered solutions to the PF Government regarding the economical woes the country is facing.

Hichilema, who is an accomplished economist and business consultant said in a statement that the government must find the political will to genuinely listen to others and learn from them, particularly the intelligentsia, from within and outside Government.

“Go back to the Zambia Plus programme and implement it in earnest. At the same time, review the implementation of the plan with the view of developing a new medium-term fiscal framework, which represents a more ambitious fiscal consolidation effort,” he advised

“Set up an economic Indaba with two main points of discussion, one to concentrate on fiscal policy and the other to deal with monetary policy. We propose two taskforce to be co-chaired by the Government and private sector, accordingly who will then be updating the nation on a regular basis.”

Hichilema bemoaned what he termed as the arrogant, know-it-all attitude of the decision-makers in Government.

“Technically inept ministers in ministries like Housing and Infrastructure should not be the ones negotiating for loans from China. The PF should find the political will to stop this dysfunction. Engage with the IMF and China with more seriousness and honesty, based on a firm and inclusive national consultation through the above-proposed indabas. Engaging the IMF should not be only about securing a financial bailout package but also to signal Government’s commitment to good governance, transparency and fiscal prudence as the basis on which economic actors can begin to respond to the Government policy intentions.”

“Re-engage Cooperating Partners, especially those that have traditionally supported social sectors – Education, Health, poverty alleviation (Social Cash transfer), Water and Sanitation, etc. – for help with resources and technical assistance to implement effective social programmes and a robust safety net, to lessen the impact of the stabilisation measures on the most vulnerable. Rationalise infrastructure expenditure by being more rigorous and consistent with independent project appraisals, feasibility studies, environmental impact assessment and so on. These should always be done prior to the approval of any public-funded infrastructure project, without exception. Halt any further borrowing and engage creditors for possible re-profiling of the current debt”.

And Hichilema has pointed out that at the time the PF took office, they found all economic fundamentals in a healthy state.

“By 2011, the economy was growing at an average of 6.5% per annum. The debt stood at 21% of GDP and debt service was 11% of GDP. The country’s budget deficit averaged 2.6% of GDP per annum. The exchange rate was stable and inflation was in single digits,” Hichilema noted.

He continued: “Gross International reserves were at least four months of import cover. The average income per head was above US$1,600, which prompted the World Bank to reclassify Zambia a lower middle-income country. In other words, the economy was doing well in 2011. It was doing so well that the first PF Budget Speech delivered by then Minister of Finance, Hon. Alexander Chikwanda – on 11th November 2011 – acknowledged the economic achievements of the country under the stewardship of the MMD Government. He paid tribute to the MMD administrations for laying a strong foundation.”

“Then the PF came to power in 2011 and things quickly changed for the worse. They promised to build upon the firm foundation that they had inherited from the MMD Government, but they did the exact opposite. Five years down the line, the PF Government had reversed all the economic gains that the country had recorded in the previous years. And by 2017, debt stock had increased to a whopping 57% of GDP from a modest 21% of GDP in 2011. Debt service as a share of domestic revenues had increased to 29% in 2017. Economic growth declined from the 6.5% per annum on average during 2000-2011 to a meager to 3.5% per annum during 2015-2018. Exchange rate has soared from ZMW4.80 per US$1.00 in 2011 to ZMW13.10 per US$1.00 in May 2019, meaning that the Kwacha loss 173% of its value over the period. International reserves have drastically declined to about one month of import cover in 2019.”

Hichilema recalls that after realising the bad state of the economy, the PF led government brought in an “outsider” Felix Mutati to come and help.

He noted that Mutati’s recovery plan was on course by the government officials felt threatened by the proposals of reducing emoluments and other unnecessary expenditure.

Hichilema says government leaders fear austerity measures as it affects their personal income.