Low liquidity worries think-tank

THE measures in the 2020 National Budget are not enough to guarantee adequate liquidity in the market, Zambia Tax Platform (ZTP) coordinator Ibrahim Kamara has said. Mr Kamara said the ZT was concerned that the measures set out in the budget aimed at stimulating the domestic economy may not get desired results. He said this in a statement issued in Lusaka yesterday. “It is evident that the private sector in the country has continued to struggle despite being recognised as the engine of growth. “Government arrears have contributed to tight liquidity in the economy, while borrowing from the domestic market has crowded out access to finance for businesses to expand,” he said. Mr Kamara said the long term pressure placed on the private sector by the accumulated domestic arrears had also contributed to the declining growth rate of the economy. He said domestic arrears had increased to K20.2 billion Kwacha in from K . billion in 2018, a staggering 29 percent rise given the already struggling economy. “Government has proposed to spend only K2.3 billion in 2020 toward the dismantling of domestic arrears. This means only 11percent of the bill will be settled by end of year 2020. This amount is not sufficient considering that suppliers have been affected and their businesses slowed down due to non-payments by Government,” he said. Mr Kamara said it was critical that Government prioritised a consolidated approach to creating an enabling environment for the private sector to ourish. He said the Small and Medium Enterprises (SMEs) needed to grow especially that it constituted more than 90 percent of the formal sector. Mr Kamara urged Government to consider increasing the allocation for dismantling domestic arrears to not less than 40 percent of the total arrears to mitigate the slow-down in investment.