WHERE IS THE ECONOMIC RECOVERY PLAN?

FIRST, there is little debate that our economy is in dire stress. It has been on a downward spiral for the past two years or so; partially due to the Covid-19 pandemic and partially due to mismanagement.

Although economic pundits rarely agree on anything, l think we are agreeable that we need to turnaround our economy towards a path of growth, job creation, better standard of living and fiscal sustainability.

Prior to the August 12, 2021 general elections, the then ruling PF administration put forward their Economic Recovery Plan (ERP) in December 2020.

After reviewing the Government’s ERP at the time, we did not agree with it and on January 21, 2021, we unveiled the PeP alternative Economic Recovery Plan for Zambia (PAERPZ).

As we headed towards the August polls, we nudged the then main opposition UPND to unveil their ERP, especially given the fact that their President kept talking about his grand plan for turning around the economy.

We wanted UPND’s ERP to be documented and shared with the public so that we could review it. But that never came.

Anyway, fast forward to the present day, UPND won the August polls and subsequently formed Government. They have been in office for slightly more than three months now.

They have unveiled the 2022 national budget in which there hasn’t been any significant economic policy shift compared to previous fiscal years.

It has instead given the mines a de facto tax holiday and to get on an IMF programme as well as embark on an expansionary fiscal drive which has seen the planned employment of 30, 000 additional teachers and 11, 500 additional health personnel in the 2022 fiscal year.

Our expectation was that the first thing which the UPND administration would do once sworn into office would be to develop an Economic Recovery Plan for the country.

We expected such an ERP to have short-term, medium-term and long-term milestones, interventions and performance measures which would be implemented by Government with the overall aim of transforming our economy from the current downward spiral of economic stagnation, unemployment, high cost of living and general hopelessness to a new dawn of economic growth, job creation and lower cost of living over the next five years.

We expected every subsequent economic policy by Government to fit into and advance the objectives of its ERP. We expected the 2022 national budget and the national budgets of all subsequent fiscal years up to 2026 to fit into and advance the attainment of the ERP.

We expected Government’s decision to get on or not to get on an IMF programme to be determined by whether such a programme would contribute to the economic recovery plan of our country. But where is the Economic Recovery Plan?

The failure by the new dawn administration to develop an ERP means that there is no framework to guide the various economic policies and interventions by Government.

When a country’s economic policies and interventions are not synchronised by a framework such as an ERP, they tend to be haphazard and in self-conflict.

That means you will have one policy which is pulling and another which is pushing, with the net result being zero. But let us not speculate.

Let us examine some of the recently implemented economic policies by the UPND administration and let us determine whether they have been consistent or in self-conflict.

One of the first things which the new dawn administration announced to us after taking over the reins of Government was that the coffers are empty. So if the coffers are empty, the natural next step is to fill the coffers, isn’t it? And the main way of filling our national coffers is by collecting tax isn’t it?

And one of the few sectors of our economy which is doing extremely well at the moment, with copper at more than $11, 000 per tonne, is the mining sector isn’t it?

But instead of collecting as much tax as possible from the mining sector, why did the new dawn administration give a de facto tax holiday to the mines? That is a self-conflict wound isn’t it?

Whereby on one hand you are complaining that the coffers are empty and on the other hand you do not want to collect tax from the only sector of the economy that is doing exceptionally well and that is leaping supernormal profits?

Let us look at another example of economic policy conflict by the new dawn administration. The issue of the cost of living. One of the main issues which the Zambian people have been complaining about in the past five years or so, is the high cost of living.

Prices commodities have been going up to much compared to people’s incomes. The cost of living is just too high and money is nowhere to be found.

This cry is not only applicable to the low-income people in the compounds but even people mumayadi are complaining. Time and again, President Hichilema has sworn to reduce the cost of living for Zambians.

But how do you reduce the cost of living by increasing the prices of key production inputs such as fuel and electricity? This is a self-conflict isn’t it?

Let us look at a third example. From a fiscal management point of view, the biggest challenge which our treasury has is the issue of the fiscal deficit. In simple terms, a fiscal deficit occurs when Government expenditure is larger than its revenue.

In fact, this is one of the main arguments put forward by the new dawn administration for bringing in the IMF, so that they can provide fiscal support.

But when your expenditure is larger than your income, you need to either reduce your expenditure or increase your income or both isn’t it?

But for the new dawn administration, they do the exact opposite. They increase expenditure by hiring 30, 000 additional teachers and reduce income by giving the mines a de facto tax holiday.

So how can Government expect to solve a fiscal deficit when their actions are actually increasing it?

All these economic policy conflicts which l have illustrated would not happen if the new dawn administration had an Economic Recovery Plan to act as the main guiding framework for all economic policies and interventions.

The failure by the new dawn administration to develop an ERP means that their policy interventions are unlikely to be synchronised. They’ll implement a policy which pulls and another which pushes with the net result being zero.

And in the midst of all this confusion, Zambians are suffering and getting deeper and deeper into poverty. And let us be clear about one thing here; these early failures by the new dawn administration are not because they lack advice, no.

We have always been very generous with our advice to this newly birthed administration from the word go. However, the biggest problem with them is that they are too self-righteous.

They think they know it all. However, their arrogance is not backed by competence. It is empty arrogance.

The only question that remains to be answered is how long Zambians will tolerate this empty arrogance by the UPND administration in the management of national matters. Only the people themselves can answer that question.

Our expectation was that the first thing which the UPND administration would do once sworn into office would be to develop an Economic Recovery Plan for the country.