AfDB Warns On More Poverty And Job Losses

The African Development Bank (AfDB) has waned that poverty could be set to increase due to significant job losses across the services, manufacturing and tourism sectors in its latest Zambia Economic Outlook. 

According to the AfDB, Zambia’s economy is projected to grow by 1% in 2021 and 2% in 2022, underpinned by recovery in the mining, tourism and manufacturing sectors. Growth contracted by an estimated 4.9% in 2020. However, the economy was already struggling before the pandemic hit, recording growth of just 1.9% in 2019. 

“Even before the pandemic, the economy was experiencing serious macroeconomic challenges, such as high inflation, widening fiscal deficits, unsustainable debt levels, low international reserves, and tight liquidity conditions. Price levels and the financial sector have not stabilised, despite government efforts to deploy monetary easing in 2019 and 2020,” AfDB writes. 

The bank also identified any failure to effectively implement the Economic Recovery Programme as a high risk to the economy and advised the government as to how to work towards debt sustainability.

“To attain debt sustainability, Zambia must stop accumulating new external debt, increase domestic revenues, curb runaway public spending, and create a stronger institutional public financial management framework,” the bank advised. 

In its economic outlook the AfDB notes that the stock of public debt increased to 104% of Gross Domestic Product (GDP) in 2020. It also pointed to the rise in inflation to well above its target rate of 6-8%. Inflation reach 17.4% in 2020 and has been stubbornly over 20% more recently.