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Sunday, 1 June 2014

On the falling Kwacha

Editor's note : the article below is from a statement released last week by Hakainde Hichilema (UPND) on the ongoing depreciation and volatility of the Zambian Kwacha,. It appears to support the disastrous removal of SI33 and SI55 and calls for the reimposition of the windfall tax :
The continual sliding of the Kwacha is not only an indication of the PF’s failure to run the economy, but it actually borders on economic sabotage.

It is unacceptable and embarrassing that since PF took over power in 2011, our currency can today be on free fall where it is always being declared as the worst performing currency in the world, as if there are no people running a government in place.

The excuse being given that the weakening of the currency is as a result of low copper prices does not hold water because the metal prices are way still higher than 2000s when the Kwacha was still doing better.

To cure the situation, the PF must first accept that among the reasons for the depreciation of the Kwacha are careless policies and wanton expenditure that are having a telling effect on our fledging economy.

By deciding to tie all the revenues and borrowed money into infrastructure, PF have made our economy consume more than it is producing to generate more wealth.

Also other than the poor policies such as the introduction of statutory instruments 33 & 55 that killed our monetary policies, PF are also not generating enough revenue from the few productive sectors of the economy.

As UPND we insist that the Kwacha fall can also be arrested by introduction of proper tax on the mining sector such as windfall tax.

As country, whereas we need investment infrastructure, there is also need to heavily release money for the manufacturing sector so as to reduce our heavy dependency on imports, and therefore create jobs.

With the free-falling Kwacha, we have consigned our small scale businessmen such as cross border traders, motor vehicle parts dealers, those young men and women who make a living selling fruits and other imported items such as toys in our streets and roads to perpetual poverty.

At this rate, the prices of fuel, basic food prices, fertiliser and other agriculture inputs will continue going up thereby increasing the cost of living for our people.



Is the UPND position on the Kwacha coherent? And has it offered a sufficient, clear and credible alternative plan to take Zambia's economy forward?

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