The Consumer Unit Trust Society (CUTS) International Zambia says Zambia’s trade deficit has negative implications on the budget performance as earnings from Zambia’s exports are one of the key ways that the budget is financed.
For the last four years, Zambia has recorded a negative trade balance.
CUTS International Zambia Policy Analyst Ishmael Zulu says Zambia has been spending more money annually on imports than it has been receiving from the sale of exports.
Mr. Zulu has attributed this to factors such as borrowing money for investments which lead to the deterioration in current account position.
He says these earnings are also particularly important as some of Zambia’s national budget must be paid in foreign currency.
“Zambia’s trade deficit could be detrimental to Zambia’s economic outlook and have negative impacts not only on Zambia’s budget, but also employment, growth, and its currency,” he said.
Mr. Zulu states that given that Zambia is a country that is currently facing a number of different economic setbacks, a negative trade balance can be a hindrance to achieving the economic growth necessary to help it achieve its developmental objectives.
He adds that the Government therefore needs to ensure a favourable trade balance if it is to achieve economic stability.
“In order to understand how the negative impact of Zambia’s trade deficit impacts the performance of the budget, it is important to understand the main drivers of Zambia’s trade deficit. Addressing these issues can help improve Zambia’s budget performance,” he said.
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