ZAMBIA CONTINUES TO BE A VICTIM OF WIZARD ECONOMICS
By. Mbita Chitala PhD
The UPND-led government White Paper for the medium-term budget plan 2025-2027 is simply a continuation of failed wizard or voodoo economics that has continued to be a shackle and disincentive on Zambia’s development trajectory. It is anchored on the disastrous 8th National Development Plan 2022-2026 that has been driven by a failed IMF austerity programme.
The UPND-led government plans to reduce the overall level of economic activity by 13.8% and plan to reduce the budget deficit from 3.1% of GDP in 2025 to 0.7% in 2027 and lower government spending from the current 26.6% of GDP to 24.8% of GDP by 2027. This is a disaster. How does a government plan to fail? To under develop? Such a programme must be stopped. Zambia needs a developmental state to eradicate poverty, inequality and general underdevelopment.
At the same time the UPND-led government plan to increase domestic revenue from the current 18% of GDP to 21.2% by 2027 and this will be done by increasing taxes on our already over taxed citizens. This is almost like practicing some indirect genocide on the people. The Minister of Finance and his friends have already raised taxes in all government services through fake statutory instruments. This is as if to punish the people. At the same time, they have given up taxing the mines by making reducing royalties and making them tax deductible and so on. This is not good for Zambia.
The further plan to restructure our suffocating external debt which they have so far failed because they have marginalized some of critical Zambia’s friends like China and Russia.
The medium-term plan further proposes to compel Bank of Zambia to increase interest rates from the current high of 14% to even higher with the effect that they will lead to reduced borrowing and investment in our economy.
They also propose to undertake supply-side measures such as increasing reserve requirements from the current almost laughable 26% with the hope of reducing money supply. The effect of this has been to reduce money for lending and this inevitably leads to high costs, explodes inflation and leads to bank finance instability and recession in the economy. This is truly voodoo economics as the medium-term plan will lead not only to recession but will implode unemployment and worsen the poverty of our people.
The UPND-led government medium-plan 2025-2027 is not only unrealistic but is based on careless assumptions that lack any empirical evidence and will lead to economic instability and worsened poverty of our people. Inflation is bound to increase from the current 13.8%. Our per capita income is bound to reduce from the current US$1,468 when the global average is US$10,000. Poverty incidence which was 54.4% in 2015 and jumped to 60% in 2024 is bound to increase. This is not good.
All this call for change in our governance system.
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