By Jane Chanda
Economist Emmanuel Zulu says Zambia’s inflation rate, which has increased to 15 percent is way above the single-digit target of 6-8 percent set by the government, and thereby increasing poverty levels in the country.
Zulu has attributed the high inflation rate to drought, food insecurity, exchange rate fluctuations, and the country’s reliance on imports.
“The inflation rate has continued to trend upwards, eroding the purchasing power of money and potentially increasing poverty levels, already high at 60 per cent,” Zulu said. “The government’s monetary policy measures have not been effective in controlling inflation, and fiscal measures have had a limited impact.”
Zulu emphasised the need for a balanced approach, including investing in agriculture, stimulating the mining sector, and addressing foreign exchange market challenges.
“We need to look at how the IMF program can span out and devise other modalities to work around policy instruments, ensuring key players in the market are taken care of,” he said.
And economist Kelvin Chisanga echoed Zulu’s sentiments, highlighting the impact of drought on food security and the economy.
“Food inflation has not come down due to fractuations in food harvest and production, and the current drought has significantly affected output, estimating over 6 million Zambians to be affected by hunger,” Chisanga said.
He also noted the challenges in the forex market, saying, the country’s export basket was not doing well, leading to high import-driven factors and inflation.”
Both economists agreed that the supplementary budget was a step in the right direction to address some of the challenging components, including debt repayment and social empowerment schemes.
However, they stressed the need for a comprehensive approach to tackle the root causes of inflation and ensure sustainable economic growth.
‘’We need to look at agriculture to ensure that we put the best formulation in terms of how we mitigate the power deficit as well, and we also look at procuring enough stock for farming input,” said Chisanga.
