The 2021 budget to be presented on 25 September 2020 by Finance Minister Dr. Bwalya N’gandu will have to contend with some major contingencies and unknowns as it will be presented before the outcome of the six months moratorium solicitation is concluded for the US$3 billion Euro bond.
Secretary to the treasury Fredson Yamba on 22 September announced that the ministry of Finance had commenced a consent for solicitation to holders of Zambia’s total of US$3 billion Euro bonds requesting for suspension of debt repayments for a period of six months.
Speaking in an exclusive interview with Zambian Business Times – ZBT, Association of Microfinance Institutions of Zambia (AMIZ) Executive Director Webster Mate, says micro finance institutions are hope for the best in the 2021 budget and that the finance minister tackles challenging issues like the increasing inflation, the continued depreciation of the Kwacha and basically giving hope to all the Zambians.
“We can only hope for the best, that’s how economies are, there are ups and downs. Financial players like us (micro financiers) always hope for the best. “I mean we don’t know how the minister has managed to balance this budget for 2021 the outcome on the request for repayment suspension on Euro bonds is still not complete, this issue started when he did his last presentation, there were already question marks and that the budget looked like it was not balanced” Mate told ZBT.
“And now, we got into this year 2020 and COVID -19 created even more problems. And before the year is coming to an end, another budget has to be presented. So we can only hope for the best particularly in the area of inflation”.
Mate further stated that “because we getting into elections in 2021, experience seems to tell us that politicians in an election year don’t seem to care much about the economic fundamentals. So we don’t know whether that trend is going to continue and that’s what’s worrying us”, he said.
Meanwhile, he warned that if the trend of not taking good care of the macro economic fundamentals by politicians continues, inflation may continue rise and when the elephants are fighting, it is the grass (which in this scenario is the people) who will suffer.
Chances are that inflation might continue to go up and also the pressure that is coming from the bond holders, we have to see what the outcome will only be known after the budget is already presented as the meeting is scheduled for 29 September, 2020.
We’re likely to see pressure on our foreign exchange, the Kwacha is likely to continue to weaken against internationally convertible currencies like the US dollar, Euro, Great British Pound and South African rand. The depreciation is a major driver of imported inflation, which has continued to be a major challenge.
Ideally we hope that the minister is going to come up with great ideas or strategies that will give hope to people and especially the business community as well as the ordinary Zambians on the street.
