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Expert condemns excessive blame on global crunch

Expert condemns excessive blame on global crunch
By Kabanda Chulu
Wed 28 Oct. 2009, 04:00 CAT

FINANCIAL market analyst Miles Sampa has said it is now evident that Zambia should stop blaming her shortcomings on the global financial and economic crisis.

And former Economics Association of Zambia (EAZ) national secretary Chibamba Kanyama has said the world recession had negative impacts on Zambia through reduced copper earnings that contributed to the depreciation of the kwacha.

On Monday in Lusaka, the International Monetary Fund (IMF) African department deputy director Saul Lizondo and chief-regional studies division Abebe Salassie jointly released the economic outlook for sub-Saharan Africa (SSA) titled ‘Weathering the storm’ which stated that oil exporters and middle income countries were severely hit while low income countries such as Zambia recorded less impacts of the recession.

The IMF stated that while financial sectors in many SSA have come under strain, they have largely escaped the huge contractions and losses witnessed in many other countries and foreign exchange reserve levels were still close to historical highs.

Commenting on the report yesterday, Sampa said the misfortune of oil exporters was supposed to be Zambia’s gain through reduced prices though it did not happen this way.

“It is evident that we cannot blame all our shortcomings on the global crisis and some current economic challenges are not entirely due to the recession as evidenced by the IMF report hence the negative growth by oil exporters should have been more beneficial to us through oil prices that were reduced,” said Sampa.

“But we did not see more growth and this shows that we have several challenges to address if we have to benefit economically from any shifts in the global economy.”

And Kanyama said the IMF report should have focused more on the impact of the recession on Zambia’s financial sector which recorded severe impacts resulting in many banks failing to lend out money.

“The impact of the recession was huge in Zambia and it affected us on many fronts. Firstly, its impact on copper industry resulted in significant reduction of earnings and we also felt the depreciation of the kwacha resulting in reduced imports into the country that resulted in reduced government revenue. So all these developments had a direct link to the recession whose impact is severe not less,” said Kanyama.

“And we have not even felt the impact of government borrowing since reduced imports are feeding into government’s increased borrowing and also the exchange rate was badly affected resulting in many banks failing to lend out money.”

The IMF has recommended that wherever debt sustainability or already high inflation rates were not a binding constraint, fiscal and monetary policies should remain supportive until there were clear indications that recovery is gaining momentum.

“In countries where financing is a problem, the focus should remain on containing macroeconomic imbalances in case these further undermine economic growth. For these countries, concessional financing is the most viable way to mitigate the impact of the slowdown on vulnerable groups,” it stated.

The IMF stated that macroeconomic aggregates in the low income countries and fragile state groupings appear on average to have been less affected, although the picture varies.

It stated that some countries seem poised to escape the crisis with relatively modest decelerations in growth while others, particularly those that had significant macroeconomic imbalances at the start of the global slowdown were faring poorly.

For the case of Zambia, IMF has projected economic growth as percentage of GDP to stand at 4.5 per cent in 2009 and five per cent in 2010.

Labels: CHIBAMBA KANYAMA, GREAT DEPRESSION II, IMF, MILES SAMPA, NEOLIBERALISM

posted by MrK @ 4:02 AM