The International Monetary Fund – IMF has projected that Zambia’s economic growth rate will fall to 2.9% next year from the 3.1% targeted for this year 2019.
In the annual World Economic Report released at the just ended Springs Meeting in Washington D.C, the report indicates that the country’s Gross Domestic Product- GDP growth rate has dropped from 3.5% in 2018 to 3.1% in 2019 and that it will further drop to 2.9% next year.
And Zanaco head of Economics and research Dr. Patrick Chileshe told the Zambia Business Times – ZBT in an interview that if government which is the largest spender is not spending as expected, then all other economic sectors are likely to be negatively affected which will result in low economic activity.
“The growing fiscal challenges that government is facing which has seen government struggle to make good use of its financial obligation such as dismantling of arrears, slow payments for goods and services, the delay in salaries for government workers in the recent past will have a negative effect on the growth of the economy,” he said.
Dr. Chileshe also said that the re-introduction of the sales tax is causing a lot of anxiety among business which has led to business owners postponing some investment project as they wait to observe how the sales tax is going to play out overtime.
“Some Investors current business plans were made during a period when cash projection where based on a VAT system. Now with the introduction of the Sales tax, many companies might suspend their projects until they are clear of how the sales tax will impact them ,” he said.
Dr. Chileshe added that the country’s current account balance is being projected to be in negative due to a lot of negative investors sentiment from abroad. He says some investors are largely diversifying out of the Zambian market and re-investing their capital in other market.
