By NATION REPORTER
THE Economist Intelligence Unit report has predicted that the Patriotic Front (PF), led by the President, Edgar Lungu will remain in power in the 2020 to 2024 forecast period.
The report however states that the time in power will be turbulent as a steep recession hits in 2020, stoking widespread unrest.
“The Economist Intelligence Unit expects the ruling Patriotic Front (PF), led by the president, Edgar Lungu, to remain in power in the 2020-24 forecast period. The party’s time in power will be turbulent as a steep recession hits in 2020, stoking widespread unrest,” the report for the month ending September 13, 2020 reads.The report also indicates that there no sovereign default being foreseen for Zambia’s debt, but this remains a severe risk.
The report states that Zambia is likely to get a restructuring on its bilateral Chinese debt to meet its balance-of-payments needs.
It however indicates that Zambia would find it hard to secure a loan from the IMF due to unsustainable debt load.
“The country is, however, likely to get a restructuring on its bilateral Chinese debt to meet its balance-of-payments needs. We are not forecasting a sovereign default, but this remains a severe risk,” the report reads in part.
The EIU report states that fiscal policy will be lax in 2020 as the government undertakes fiscal stimulus while pursuing a debt-financed infrastructure programme.
It indicates that from 2021 the fiscal deficit will narrow gradually, with deep spending cuts to begin after the 2021 elections.The economic impact of the coronavirus (Covid-19) pandemic, the report states will necessitate an accommodative monetary policy by the Bank of Zambia (BoZ) in 2020-24 and that inflationary pressures will diminish from 2022 as the fiscal deficit narrows.
“In 2020 the global recession caused by the pandemic will drive Zambia’s real GDP down by 3.5 percent. In 2021 GDP will grow by 3.2 percent from a low base. Growth will then strengthen, reaching 5.5 percent in 2024,” the report states.
The report indicates that the current account surplus will erode in 2020 as exports fall owing to pandemic-driven disruption.
It also states that it will rise from 2021, in line with rising copper prices, apart from a temporary dip in 2022 as higher interest payments elevate primary income debits.
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