ECONOMIC RECOVERY PLAN TO SHAPE ZAMBIA

SUN BUSINESS writes @SunZambian THE Economic Recovery Programme 2020 – 2023 (ERP) has been launched by President Lungu with a rallying call that the time has come to decide the country’s own destiny. The Republican President presented the Government’s 2020-2023 Economic Recovery Plan at the Mulungushi International Conference Centre in Lusaka at an event attended […]

ECONOMIC RECOVERY PLAN TO SHAPE ZAMBIA
SUN BUSINESS writes @SunZambian THE Economic Recovery Programme 2020 – 2023 (ERP) has been launched by President Lungu with a rallying call that the time has come to decide the country’s own destiny. The Republican President presented the Government’s 2020-2023 Economic Recovery Plan at the Mulungushi International Conference Centre in Lusaka at an event attended by various stakeholders from the diplomatic, financial and development sectors. The Economic Recovery Plan addresses key economic challenges Zambia is facing as a result of the Covid-19 pandemic and a plunge in global commodity prices. The plan provides a roadmap for far-reaching economic reforms to achieve growth, prosperity and sustainable public debt levels. He indicated that government will certainly work with investors that have exhibited goodwill and they are there. “This economic recovery programme provides for a way to capitalise on the high mineral commodity prices to harness that potential for the benefit of the country. In that respect, we must build on the potential of gold to systematically build our strategic reserves. We must assume a significant stake in some selected mine assets so that we create sufficient value for the nation and also a means of comparing such mines with private sector owned mines,” said the President. “In addition, owning a stake in some strategic mines gives the state the leverage required to utilise the defined mineral resources to benefit the nation beyond taxes. You will, therefore, observe that there is a deliberate strategy to acquire additional stake in some selected mines to support the growth trajectory. I must mention here that this is not nationalisation of mines, on the contrary, it’s the state acquiring majority stake in selected mines while allowing private investors to also participate in the sector.” President Lungu further indicated that whereas the current mines with defined resources have supported this generation of large-scale mining activities, Zambia must invest in more exploration to further guarantee success in the extractive industry. He explained that exploration will not only be for minerals but also for oil and gas. “My government through this economic recovery plan will also provide a stable fiscal regime for the extractive sector that can promote more investment in exploration. We have already started seeing the potential of gold with the advent of Zambia Gold limited. The plan recognises the need to harness the gold potential and expand it by encouraging more investment in the gold subsector. Formalisation of the small-scale and artisanal sector cannot be over emphasised so that all the gold is not only accounted for but also used to spur economic development in the nation,” he added. “The economic recovery programme, therefore, projects the need to organise the gold subsector both in terms of the trading but also mining and processing. Ladies and gentlemen, as a country, we have depended on copper since its discovery. We have been told for years now that copper is a wasting asset and that we should look at other sectors for our survival in future. However, copper continues to sustain our economy and I dare say it will still continue to do so for years to come.” The Head of State emphasised that his vision is that, while mining continues to sustain the country, there is need for value addition to the resources so that the country produces a range of products from the minerals, gain foreign exchange from such products, and also create further employment for the people apart from mining. The Economic Recovery Plan aims to ensure economic growth and financial stability by improving business climate, promoting manufacturing and local industries, especially, agriculture, tourism, mining and energy and reducing poverty and inequality through targeted social programmes. The plan is based on five key pillars: – Restoring macroeconomic financial stability; – Attaining fiscal and debtsustainability; – Restoring economic growth anddiversification; – Dismantling of arrears; and – bolstering social protection programmes. In the Plan, the Government has set a number of macroeconomic goals to reach financial and economic stability in the coming years as follows: Attaining real GDP growth rate of above 3% by 2022 Reducing the fiscal deficit to no more than 9% in 2021, no more than 6.1% in 2022 and no more than 4.9% of GDP in 2023 Increasing domestic revenue to not less than an average of 18% of GDP over the period 2021 to 2023 Reducing and maintaining inflation within the 6-8% range by 2023 Raising international reserves to at least 3 months of import cover by 2023 Significantly dismantling domestic arrears and curtail their accumulation Reducing the pace of debt accumulation and ensuring sustainability in the next 3 to 5 years. The President announced the strong commitment of the country’s leadership to delivering structural reforms and ensuring transparency in communication with all stakeholders. “Our economy has been hit very hard by the Covid-19 pandemic. We are determined to bring our economy back on its feet, stabilise our public finances and embark on an ambitious reforms programme to ensure a more prosperous and more economically resilient future for Zambia,” President Lungu said. He outlined some of the main reforms the country is planning to undertake: “In order for the policy measures of the Economic Recovery Programme to succeed, there is need for the country to undertake key structural and legal reforms such as the (i) comprehensive reform of the Farmer Input Support Programme (FISP) to improve efficiency and make it more cost effective to respond to the needs of the beneficiaries; (ii) appraisal of capital projects through the Public Investment Board before inclusion in the national budget in order to improve value for money and return on investment; (iii) debt management reforms to enhance transparency in debt management and increase parliamentary oversight in borrowing activities; (iv) fuel procurement reforms to ensure that fuel pricing remains cost reflective and prevent further accumulation of fuel arrears; (v) electricity sub-sect reforms to comprehensively review all processes in ZESCO and the industry as a whole with a view to promote efficiency; (vi) enhancing the financial viability and performance of State Owned Enterprises (SOEs) in order to increase their contribution to the economy; (vii) reducing on human contact and increasing transparency , efficiency, security and compliance in collection of non-tax revenues by utilising ICT solutions under the Government Service Bus.” “This is the first time in history that Zambia has developed such an ambitious and far-reaching economic plan. Implementation is key for success, and this Recovery Plan has meticulously thought-through steps for the implementation of each outlined reform,” the President said. Minister of Finance Bwalya N’gandu added: “The Recovery plan provides a solid basis for engaging with our multilateral partners, including the IMF, international bondholders and other creditors as well as our bilateral partners. I am confident that this reform agenda will ensure Zambia’s return to sustainable debt levels, stable economic growth and a resilient financial system.”