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Economist calls for increase in FOREX inflows

• This can be done by attracting more foreign investment participation into various sectors of the economy.
• There is need for attractive investment incentives, manageable tax regime and stable, predictable policies.
• These activities will increase Zambia’s GDP output and ultimately boost GDP.

An Economist has called for an increase in foreign currency inflows especially the United States dollar if the country’s economy is to be resilient to debt-servicing burdens in 2023 as projected by the Economist Intelligence Unit (EIU).
Speaking in an interview with Money FM News, Mathews Muyembe said this can be done by attracting more foreign investment participation into various sectors of the economy through captivating investment incentives, manageable tax regime and stable, predictable policies
Mr. Muyembe stated that there is also need to increase the country’s export base through enhanced agricultural products, mineral beneficiation and value addition, international tourism, manufacturing of products for export markets and alternative energy sources to ramp up production at a cheaper rate to boost Gross Domestic Product (GDP) output.
In its Africa Outlook 2023 Report, the EIU said the public-sector debt/GDP ratio will remain above 60% for Africa in 2022 and 2023 and some African countries will far exceed this level.
“Well a high public debt relative to GDP is a concern not only for any economy but also for your creditors and investors. For our developing economies, if your debt to GDP ratio is 43% or below that is good as it is a reliable measure of the health of your economy and its ease to repay its debt. While for developing states, generally a public debt to GDP ratio of 60% may stress economies which might run into debt repayment defaults. “
“Our economies can only be resilient to some extent by increasing foreign currency inflows, especially the US green back by attracting more foreign investment participation into various sectors of our economy through attractive investment incentives, manageable tax regime and stable, predictable policies and increasing our export base through increased agricultural products and Agri processing, mineral beneficiation and value addition, increased international tourism, increased manufacturing of products for export markets and alternative energy sources to rump up production at a cheaper rate,” Mr. Muyembe stated.
He noted that the aforementioned activities will increase Zambia’s GDP output and ultimately boost GDP as all this rides on healthy international trade.
Mr. Muyembe further said if disruption to International trade arises as country borders shut due to Corona virus variants, ready markets may shut their borders, restricting trade and movement of goods and services as well as inputs to production.
“It’s a global village so we may not be fully insulated from external shocks but can reduce the impact,” he added.
According to Economist Intelligence Unit (EIU), Ghana and six other African countries have enormous amounts of debt relative to Gross Domestic Product (GDP) and their governments will grapple with debt-servicing burdens that would eat up a substantial share of their revenue in 2023.
Tunisia, Egypt, Congo-Brazzaville, Zambia, Zimbabwe and Mozambique are the other African countries.
It mentioned that the need to service and roll over large amounts of debt at a time when domestic and international borrowing costs are on the rise will weigh heavily on some countries in 2023 and things could get even more painful in 2024 when more capital repayments fall due.

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