• From January we have had extremely low liquidity levels.
• Government consumed a lot of goods and services the previous year but it is not paying.
• Other people that are selling goods and services in the economy suffer because there is reduced money.
An Economist has observed that the country has had extremely low levels of liquidity from January to date as government has not yet paid those who supplied goods and services to various state institutions in the previous year.
Speaking to Money FM News, Lubinda Habazooka noted that the impact is not only to the suppliers of goods and services but also people that supplied goods to suppliers for them to do business with government.
Dr. Habazooka stated that the suppliers may have borrowed from financial institutions, therefore if government has not yet paid them, they also cannot pay their employees and increase production, thereby leading to less money in circulation.
“From January we have had extremely low liquidity levels, government has consumed a lot of goods and services the previous year but government is not paying and the effect is not only to the suppliers of those goods and services but those that supplied goods to suppliers to government.”
“Those people have employees, those people borrowed from somewhere so if a business that supplied to government has not been paid, it means they also cannot pay salaries, they cannot increase production so there is no money in circulation,” Dr. Habazooka noted.
He called on government to work on the liquidity levels by ensuring that suppliers of goods and services are paid so as to unlock businesses and encourage operations.
“Other people that are selling goods and services in the economy suffer because there is reduced money. The lenders also don’t get back their money so there is no money to lend out.”
“So being a major player, government really needs to work on the liquidity levels, by ensuring that those that supply goods are paid so that they unlock business and encourage business operations,” he said.