Ministry of Finance of Zambia: Zambia launches far-reaching economic recovery programme to achieve growth, prosperity and sustainable public debt levels

LUSAKA, Zambia, Dec. 18, 2020 /PRNewswire/ -- On 18 December, the President of the Republic of Zambia His Excellency Dr. Edgar Chagwa Lungu presented the Government's 2020-2023 Economic Recovery Plan (ERP) at the Mulungushi International Conference Centre in Lusaka. The Economic Recovery Plan addresses key economic challenges Zambia is facing as a result of the Covid-19 pandemic and a plunge in global commodity prices. The plan provides a roadmap for far-reaching economic reforms to achieve growth, prosperity and sustainable public debt levels.

The Economic Recovery Plan aims to ensure economic growth and financial stability by improving business climate, promoting manufacturing and local industries, especially, agriculture, tourism, mining and energy and reducing poverty and inequality through targeted social programmes. The plan is based on five key pillars:

• restoring macroeconomic financial stability;
• attaining fiscal and debt sustainability;
• restoring economic growth and diversification;
• dismantling of arrears;
• bolstering social protection programmes.

In the Plan, the Government has set a number of macroeconomic goals to reach financial and economic stability in the coming years as follows:

• Attaining real GDP growth rate of above 3% by 2022
• Reducing the fiscal deficit to no more than 9% in 2021, no more than 6.1% in 2022 and no more than 4.9% of GDP in 2023
• Increasing domestic revenue to not less than an average of 18% of GDP over the period 2021 to 2023
• Reducing and maintaining inflation within the 6-8% range by 2023
• Raising international reserves to at least 3 months of import cover by 2023
• Significantly dismantling domestic arrears and curtail their accumulation
• Reducing the pace of debt accumulation and ensuring sustainability in the next 3 to 5 years.

The President announced the strong commitment of the country's leadership to delivering structural reforms and ensuring transparency in communication with all stakeholders. "Our economy has been hit very hard by the Covid-19 pandemic. We are determined to bring our economy back on its feet, stabilise our public finances and embark on an ambitious reforms programme to ensure a more prosperous and more economically resilient future for Zambia," President Lungu said.

He outlined some of the main reforms the country is planning to undertake: "In order for the policy measures of the Economic Recovery Programme to succeed, there is need for the country to undertake key structural and legal reforms such as the (i) comprehensive reform of the Farmer Input Support Programme (FISP) to improve efficiency and make it more cost effective to respond to the needs of the beneficiaries; (ii) appraisal of capital projects through the Public Investment Board before inclusion in the national budget in order to improve value for money and return on investment; (iii) debt management reforms to enhance transparency in debt management and increase parliamentary oversight in borrowing activities; (iv) fuel procurement reforms to ensure that fuel pricing remains cost reflective and prevent further accumulation of fuel arrears; (v) electricity sub-sect reforms to comprehensively review all processes in ZESCO and the industry as a whole with a view to promote efficiency; (vi) enhancing the financial viability and performance of State Owned Enterprises (SOEs) in order to increase their contribution to the economy; (vii) reducing on human contact and increasing transparency , efficiency, security and compliance in collection of non-tax revenues by utilising ICT solutions under the Government Service Bus."

"This is the first time in history that Zambia has developed such an ambitious and far-reaching economic plan. Implementation is key for success, and this Recovery Plan has meticulously thought-through steps for the implementation of each outlined reform," the President said.

Minister of Finance Bwalya N'gandu added: "The Recovery plan provides a solid basis for engaging with our multilateral partners, including the IMF, international bondholders and other creditors as well as our bilateral partners. I am confident that this reform agenda will ensure Zambia's return to sustainable debt levels, stable economic growth and a resilient financial system."

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SOURCE Ministry of Finance of Zambia