Downgrading of economic outlook saddens Musokotwane

COMMENT - Gee, I guess this means we can't 'borrow more'. Why is anyone asking this corrupt loser for his opinion anyway? Bicycle Man is just a mouthpiece for the World Bank.

Downgrading of economic outlook saddens Musokotwane
By Kombe Chimpinde
Mon 05 Mar. 2012, 11:59 CAT

DR Situmbeko Musokotwane says he is very saddened with the downgrading of Zambia's economic outlook from stable to negative by global rating agency, Fitch.

Commenting on Fitch's downgrading of Zambia's economic outlook from stable to negative, a few months before the country's maiden US $700 million Eurobond is issued, Dr Musokotwane said as immediate past minister of finance, he was saddened by the outcome as it had a considerable amount of repercussions on the country's economy and urged the current government to examine their attitudes and change the course of the economy.

"By the outlook being considered to be negative from being stable, what investors are saying is they are not sure about the safety of investments in Zambia and to reverse this, it takes a long time because people are always nervous about the safety of their money," he said in an interview.

Dr Situmbeko said the lack of predictability in the economic environment necessitated by policy shifts would continue to erode investor confidence if not dealt with.

"There is no rocket science about it. Investments for us are very critical because it is through them that we get jobs to be created, industries to be thriving, agriculture to be going, so it is investment that is very critical.

[Neoliberal idiocy. - MrK]

But the most important thing is that this investment is secure. No one wants to take investment to a country where you commit millions of dollars or thousands of kwacha, then you are told the following day, ‘sorry, we have taken away your investment'," he said.

"Government, however, has a chance to re-examine the attitudes and change the course. They must be a government that is responsible and avoid making careless mistakes. No one stops them from investigating corruption and fraud; that is the responsibility of every government."

Dr Situmbeko said any elements that threatened investor confidence must be taken seriously.

"If that (investment) is missing, you may have your minerals in the ground but there will be no finance to dig the minerals out. You may have your wildlife but there will be no finance to build hospitals and other infrastructure required by tourists. The end result is poverty," said Dr Situmbeko.

[And when 'financing' comes from abroad, who then OWNS those minerals, wildlife, hospitals and other infrastricture? Oh I remember, in neoliberal world, it doesn't matter who owns them. How could I forget? - MrK]

And briefing journalists in Lusaka on Friday, former commerce minister Felix Mutati said Fitch negative rating of Zambia's economic outlook should be seen by all Zambians as a point of great concern.

Mutati, who is also head of the opposition in Parliament, said the economic fundamentals that have propelled the country for some time had began to erode.

"This means the economic and investment environment which in part is based on how a country is rated will be negatively impacted," said Mutati.

"Some of the reasons that the ratings will be negative is from a policy perception in the implementation of policies…"

Fitch rating which provides issuer and bond ratings last year assigned Zambia long-term foreign and local currency Issuer Default Ratings (IDR) of B+.
In its latest outlook released last Thursday, Fitch downgraded Zambia's ratings from stable, citing concerns about the direction of economic policy in the southern African state.

"The revision of Zambia's rating reflects the agency's concerns about some of the government's recent actions and announcements, which bring into question the direction of economic policy," Fitch stated.

The agency affirmed Zambia's short-term issuer default ratings at ‘B' and the country ceiling at ‘BB-‘.

Fitch stated that Zambia's recent decision to reverse a privatisation deal could undermine property rights, while planned reforms of the mining and banking sectors could negatively impact investment and consequently macro-economic stability.

It stated that the government's decisions to reverse the privatisation of Zamtel and investigate the privatisation of Zanaco represent "perhaps the most worrying recent development".