Maravi

PF must plan economy on long-term basis - Mutati

PF must plan economy on long-term basis - Mutati
By Chiwoyu Sinyangwe
Wed 04 Jan. 2012, 13:57 CAT

THE PF government must move away from the 90-day syndrome and plan the economy on a medium to long-term basis, says MMD presidential aspirant Felix Mutati. And Mutati says the predictions by key global economic institutions about a "bleak" economic outlook for this year need to be treated seriously.

Mutati, who is also MMD Lunte member of parliament and opposition parliamentary chief whip, said there was need for the PF government to lessen pronouncements and do more practical work.

"The minister of finance Alexander Chikwanda, in his budget presentation attempted quite realistically, to project the economy for next year and provide a sense of balance, and his performance during budget session has given encouragement that he is looking at the fundamentals and making sure they go well," Mutati said in an interview.

"My message is that his other colleagues must take a leaf in his approach and do less pronouncements and much more delivery. We must abandon short-term targets when you are running an economy. An economy is a marathon, so we must move away from the 90-day syndrome to planning the management of the economy on a medium to long-term basis because that is what is basically sustainable." Mutati said now was the time for the government to do its work because the campaign period was over.

"Pronouncements are for electioneering; now that phase is over. Now, we are at a phase where we have to fold our sleeves and begin to face reality and the taste of the governance that it may have been easy from outside, and when you enter into the house, you find that it is not as easy as you had thought outside," he said.

And Mutati said warnings by key financial and global multilateral institutions about a difficult 2012 needed to be treated seriously.

International Monetary Fund (IMF) managing director Christine Lagarde recently said no country in the world was immune to the crisis and all must take steps to boost growth, with risks of inaction, including isolation and other elements reminiscent of the 1930s depression.

"There is no economy in the world, whether low-income countries, emerging markets, middle-income countries or super-advanced economies that will be immune to the crisis that we see not only unfolding but escalating," Lagarde cautioned.

Mutati said there was need to protect and sustain growth in the mining sector while at the same time making Zambia a competitive destination for Foreign Direct Investment amidst the expected dip in the economic performance this year.

He also said there was need to ensure cheaper working capital from the commercial banks for the private sector, while promoting regional trade during the difficult period being projected for this year.

"This year is going to be a difficult year but a good test for the new government and a test such as that one, if they can go over it, means they will be moving from crawling to walking," he said.

"2012, my biggest worry is the level of borrowing. Our target was 1.5 per cent, now, we are going to over 2.5 per cent of the GDP. On one hand, we have said we should not crowd, now you are borrowing that level plus the Eurobond. Now you may not have the implementation capacity to consume that volume of resources, so the result is sub-optimal delivery - the jobs that you want to be delivered will not actually be delivered, and instead of the banking sector lendin to private sector, they will go back to their favourite darling - the government because it has a huge appetite."

Mutati said there was need to deal with pre-election sentiments such as policy consistency, a possible policy shift on China and the windfall tax which rattled investor confidence in the post-PF victory.

He said in the absence of huge investment in the Greenfield mining projects, it would be difficult to anchor more jobs for the youths in the mining , more so, from the investor confidence perspective that it is still happening in Zambia," Mutati said.

"I see investment for 2012 being extremely competitive, particularly investment in Greenfield. Most decisions are not made on spreadsheet. They are made on the feel, the sense of the economy and what they think andsometimes the relationship. This government has got a colossal challenge to continue to anchor investor confidence, particularly for 2012, and to be able to attract one or two major investment."

The IMF has warned that it is likely to cut its 2012 growth projections, with the economy struggling with a worsening two-year Euro zone debt crisis and sluggish US growth.

There are also signs from falling Chinese factory output that manufacturers are struggling with owing to waning global demand and tighter credit conditions.

China consumes the bulk of Zambia's copper and any impact on the external environment trickles into the country via a collapse in copper prices.

Labels: ECONOMY, FELIX MUTATI, PF

posted by MrK @ 5:39 PM