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Monday, 1 July 2013

Random Thoughts

The Government has so far spent $20m on the Constitutional process - most of it in the pockets of Technical Committee and their various "experts". And we are only at the beginning. Cabinet and Parliament have not seen a draft. The referendum is yet to come. I would be surprised if we don't surpass $100m by the time we are done. That is 13% of the much celebrated "Eurobond". May be the entire constitution process is designed as a form of financial empowerment - for the already financially empowered.

Clive Chirwa is facing the serious prospect of arrest. The Anti Corruption Commission (ACC) is allegedly after the former Zambia Railways MD for "solicitation of gratification from a foreign company". According to the The Post, the ACC believes it has "overwhelming evidence" that Chirwa "solicited for gratification from one of the companies in the UK where he was supposed to get 10 per cent from the contract to supply passenger coaches." Isn't this a timely reminder to everyone that there's no shining knight?

PF recently won the Feira bye-election comprehensively. The votes tell the story (PF : 3 529; UPND : 967; MMD : 617; UNIP: 344; and NAREP : 63). Quite importantly turnout was around 50%. The victory is important for three reasons. First, it was an MP switching sides; PF beat the combined share of the opposition; and, this was the first bye-election since the PF removed the fuel and maize subsidies. In short, PF is looking very well for 2016. The opposition needs to coalesce NOW not later.

President Sata recently described those who believe the Budget is off track as “premature, unwarranted and mischievous" because “our foreign reserves currently stand at about US$2.4 billion". Economics 101 is sufficient to point out that there's no direct relationship between maintaining foreign reserves (monetary & exchange rate policy) and the widening projected Budget deficit (fiscal policy). You can have a Budget in shambles and still have reserves at $2.4bn because you can fund the deficit by borrowing more. That statement shows that as a country we are failing the President by not even giving him basic economic advice.

Chola Mukanga | Economist | Writer
Copyright © Zambian Economist 2013

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