LUSAKA (The Business Telegraph):- Zambia in the week beginning September 20 was flooded with a confluence of events that caught the markets unawares. Starting the week with a cabinet meeting that approved a Medium-Term Expenditure Framework (MTEF) dubbed the Economic Recovery Plan – ERP for 2021 replacing the 2017-2019 Economic Growth and Stabilization – EGS Plan. This was approved in tandem with the Minister of Finance’s presentation of the 2021 estimates of revenues and expenditures, which would set the tone for the economic rebound which Republican President Edgar Chagwa Lungu had alluded to in his opening speech to parliament on September 11. Growth in 2020, is forecast to shrivel by 4.2% as disease pandemic risks persistently weigh business fabric tracked for 17 months in negative territory as measured by Purchasing Managers Index – PMI. Food security risks were top on the agenda as Zambia’s cabinet addressed the need to curb the spread of locusts that could damage crops offsetting the effects of a bumper harvest this year. Linked to food security, is inflation whose trajectory has been in decline over the last 4 months and has then started to rise higher on the back of a currency rout that is breeding cost push inflationary effects. The Zambia Statistics Agency – ZSA recorded a September headline reading of 15.7% reflecting an upward trajectory as currency weakness weighed to offset the effects of falling food prices. The Kwacha has year to date suffered a 40% valuation loss as structural imbalances in the foreign exchange market have caused currency sell-off pressure.
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