In a bid to restore trade and investor confidence in Zambia, the country’s finance minister, Alexander Chikwanda, will present a budget today (Friday) that will highlight how authorities plan to keep spending in check in the face of plunging copper revenue and severe power shortages.
According to Bloomberg news agency, the Zambian government started the year with an estimated shortfall of 4.6% of its gross domestic product (GDP), gradually raising that to 6.9%. Barclays Plc is projecting a deficit of 8.4%.
This has meant that investors, who once considered Zambian bonds a better buy than Spain’s, according to Bloomberg, are now dumping the country’s assets.
A Trade News Africa report noted that while most of the blame can be pinned on the plunging price of copper – more than 70% of Zambia’s exports - analysts also point to policy mistakes by the government.
This includes allegedly mismanaging a key hydropower facility that’s led to the worst electricity crisis on record, issuing contradictory statements on mining taxes and foreign-currency controls, and running up debt.
