2018 GDP Projected at 5.0% Despite Rising Debt, Cholera Outbreak

Zambia's economy has started picking up from the 2015-2016 economic downturn with the Bank of Zambia projecting that growth prospects would improve and Gross Domestic Product (GDP) for 2018 projected at 5.0% from 4.3% recorded last year.

Attacks on plants by army worms, which have been reported in various parts of the country, as well as delays in the distribution of farming inputs to smallholder farmers in the 2017-2018 farming season, may affect agricultural production, according to analysts.

The current cholera outbreak is also likely to mark a negative dent on the country's economy in 2018, said Chibamba Kanyama. 

"Very soon, the limiting of public gatherings will be extended to supermarkets. Should this happen, the impact on VAT collections by Zambia Revenue Authority will be lowest this month of January," he said.

According to Kanyama, the economic implications of the outbreak could not be underrated as the government has been forced to divert financial resources from other planned projects to contain the outbreak.

The failure to reach a bailout agreement with the International Monetary Fund (IMF) was a major setback for the 2017-2018 fiscal year.

The government said in September that it would resume talks on an IMF aid program in October and was hoping to get an aid package before the end of 2017.

After the IMF expressed concerns over the country's rising public debt situation,which it said was growing unsustainable and putting the country at high risk of debt distress, the year ended without the aid package.

According to IMF figures, public guaranteed debt increased from 36% of GDP at the end of 2014 to 60% as at the end of 2016.   

The two parties have since agreed to chart a new path towards debt sustainability while the government has come up with a debt management strategy which has become a centre of the talks.

The Minister of Finance Felix Mutati has assured of the government's resolve to deal with the rising debt problem.

The minister, who acknowledged that the country's debt was approaching unsustainable levels, said the government was slowing down on borrowing in order to curtail the rising debt.

"In order to ensure continued debt sustainability, government has finalized a medium term debt strategy that provides a framework for prudent management. Further, regular debt sustainability analysis will be the guiding principle for future borrowing activities," he said in a statement presented in parliament.

According to government figures, Zambia's public debt stood at USD$12.45 billion in August 2017, representing 47% of GDP with the external debt standing at USD$7.5 billion.

The revelation by the 2016 Auditor General's report that there was increased misappropriation of public resources received a backlash, especially during a time when the country was trying to tighten public expenditure which has resulted in a budget deficit.

While the government moved in quickly to assure citizens that culprits cited in the report will be dealt with, stakeholders are not convinced as the trend has been the same over the years.

"The rate at which public resources are being misappropriated and stolen for personal gain by those in authority today is unprecedented, worrying and has reached alarming heart breaking levels to ordinary Zambians," said Maxon Nkhoma, Coordinator of the Civil Society for Poverty Reduction (CSPR).

"If left unchecked this has potential to make the national treasury bankrupt," said Nkhoma.