By Dr Lubinda Haabazoka
Zimbabwe has sealed an IMF deal without getting any money from the Breton Woods institution.
The deal is all about adhering to certain conditions that the IMF has drawn for Zimbabwe.
Zambia can also learn from this by looking at other non tax domestic solutions and interventions that can be agreed with the IMF.
A certain section of Zambians have argued that we need the IMF for credibility to reduce the cost of borrowing for Zambia on existing and new debt.
Certain sections of the population “rational thinkers” to whom I belong think that we still have ways of stimulating our economy using home grown solutions that can be backed by the IMF.
Looking at austerity measures Zambia has implemented since 2015 like removal of fuel and electricity subsidies (the IMF commended this stance at our meeting with them last year) there is little room to introduce other measures that will be less harmful to citizens.
There is also need to understand that austerity measures like cutting government expenditure can have a negative effect on economic growth. In a situation where you have low liquidity levels, the best solution is a stimulus package rather than cutting costs.
Interventions that GRZ needs to make include those that will increase employment and bring money into the economy. Obama in 2008 printed over a trillion dollars and started projects all over the country to pump in money. Unfortunately we don’t have the luxury to print money so ours is to use our mineral resources as a short term measure to boost liquidity.
We also need to understand that by government officials not traveling around especially within Zambia, there are a lot more people that will suffer. To begin with, government work will suffer because an embargo on traveling will stop works from progressing. Secondly, lodges, Restaurants, filling stations, shops especially in Livingstone and other far areas won’t receive revenue as people reduce on traveling. Change from trips will no longer be there to support that brick layer employed by the civil servant whose travel has been curtailed.
It is advisable that both the private and public sector TRAVEL and SPEND MONEY to fulfill the trickle down effect. Employment in the construction sector is largely dependent on people converting their savings into real estate. Therefore we need to boost revenue so that others can benefit.
Have a fruitful week colleagues