By Jane Chanda
Dr. Mbita Chitala says the UPND government is practicing “wizard economics” that will not take the country anywhere.
And Dr. Chitala says that government’s plan to spend less but tax Zambians more meant the government was going to tax citizens into poverty.
On Sunday, Secretary to the Treasury Felix Nkulukusa announced that the government would implement a contractionary fiscal policy, which meant spending less, while increasing taxes to reduce the fiscal deficit.
But in an interview with Daily Revelation yesterday, Dr. Chitala, a former deputy Finance minister under the late President Levy Mwanawasa, described the white paper issued by Finance and National Planning minister Dr. Situmbeko Musokotwane as a disaster.
“Our country is a big team of wizard economics which Americans call voodoo economics,” he said.
Dr. Chitala said the medium term plan 2025-2027 was simply meant to undermine development efforts for Zambia to deal with poverty under-development. He criticised the government’s economic approach, labeling it “wizard economics” and a continuation of the flawed 8th National Development Plan (2022-2026).
Dr Chitala said this plan, anchored on International Monetary Fund (IMF) austerity program, had been disastrous and failed to drive meaningful progress in the country.
“In the medium term plan, the UPND government planned to reduce the overall level of economic activity in our country by a said 28 percent. This means that they will reduce the quantity deficit from 3.1 percent of Gross Domestic Product(GDP) 2025 to 0.7 percent in 2027,” Dr Chitala said, adding that the UPND’s plan to reduce spending from 26 percent to 24.8 percent of GDP may stifle economic growth and hinder poverty alleviation efforts thereby perpetuating the struggle against poverty.
Dr Chitala wondered why the government would pursue under-development policies that exacerbated poverty, while simultaneously planning to increase domestic revenue from 17 percent to 21.2 percent of GDP by 2027.
“They want to increase domestic revenue by taxing citizens to poverty. That’s why Musokotwane and his people at Ministry of Finance have increased taxes everywhere,” he said. “It is criminal that we have a government that allows to increase taxes and suffering of citizens.”
Dr Chitala said government hoped to restructure its external debt by 2027, but this seemed unlikely since they had marginalised critical countries like China and Russia that could have provided support. He explained that Zambia’s current economic policies were a cause for concern, particularly in taxation, where the government had chosen not to tax mines and instead offered concessions that he believes were essentially criminal and should not be tolerated by Zambians.
Dr Chitala also criticised government’s plan to force the Bank of Zambia (BOZ) to increase interest rates.
“They want them to increase more, meaning that will reduce borrowing, and you know people want to invest; there will be no investment in our country and economy,” Dr Chitala said.
He said the move would further burden business people, leading to financial stress and reduced purchasing power. Dr Chitala said the proposed subsidised measures, such as increasing the regime requirements to reduce money supply and combat inflation, were also misguided,
“This is fake; inflation will not reduce at all,” said Dr Chitala. “If they reduce money held by banks, meaning there will be less lending and less investments. There will be high costs, and the inflation will be high.”
Dr Chitala warned that Zambia’s economic program would have disastrous consequences, reducing economic growth and leading to a severe recession, ultimately plunging the country into extreme poverty.
He said, as of now, Zambia’s inflation rate stood at 16.70 percent, and predicted that it would only increase in the medium term adding that, with a per capita income of approximately 1,168 dollars, Zambia was already a very poor country.
“Poverty has been increasing because of this terrible wizard economics, which has risen to over 64 percent, and it’s worsening every day,” said Dr Chitala. “This is not correct; we Zambians must rise and stop this mismanagement of our economy and stop the wizard economics that has been introduced in our country by the UPND and Musokotwane and his group at the Ministry of Finance.”
In picture: Former Finance deputy minister Dr Mbita Chitala (l) with his associate Mwape Mwelwa in Lusaka. Picture by Daily Revelation Newspaper
