ZAMBIA should strive to establish better dialogue on the economy to avoid confusing messages which could injure the country’s reputation as an investment destination for international investors, says the World Bank.
According to the World Bank 6th Zambia economic brief report, there is need for Zambia to maintain its confidence from international market because all events were closely being watched.
“Eurobond issuance has also increased international interest in the Zambian economy and events are being watched much more closely than prior to 2012,” reads the report.
The report further shows that the targeted fiscal deficit of 3.8 percent in the budget may prove too optimism given the slowdown.
It however said the fiscal adjustment was required and would signal the Government’s commitment to fiscal sustainability.
The report also says debt levels have soared following repeat non-concessional borrowing making it more expensive to borrow from the international market, this leftlittle room for Government to manoeuvre.
The fiscal adjustment announced in the 2016 national budget would put less pressure on monetary policy and potentially make space for interest rates to be reduced.
The fiscal adjustment is also said to ease pressure on individuals and firms.
The report suggests that any adjustment should involve a shift in spending priorities that supports both the efficiency of public expenditures and long-term inclusive growth.
“While in many areas this is difficult to achieve, there are obvious areas for attention including the growth cost of fuel subsidies,” it says.
Meanwhile, the report implored Zambians to develop the culture of savings to safeguard their future and contribute to the economic growth.
According to the report, the lack of savings and stabilisation measures at the time Zambia’s economy was prospering had also contributed to the current economic challenges faced by the country.
“Falling copper prices and a power crisis could be met with fiscal buffers, but in Zambia, no savings were made or stabilisation measures carried out when the economy was prospering,” read the report.
The report further says that commodity-exporting countries policy makers face increasing challenges across the globe and Zambia is no exception and must grapple with multiple challenges as the economy slows down.