• Interventions to keep the inflation rate within single digit may entail the MPC employing tight policy direction.
• This may see the MPR raised slightly from the current 9.0 basis points to further tighten liquidity.
• There is need to focus on measures that can help to balance economic growth and improving people’s lives.

An Economist says Zambia needs to relax on its ambitions to attain single digit inflation target range of 6% to 8% in order to stimulate economic growth.
Speaking to Money FM News, Emmanuel Zulu said stimulation of growth will have to see the fiscal hand loosening up to free liquidity in the economy either through spending, less borrowing, tax cuts or incentivizing Foreign Direct Investment (FDI) flows.
Mr. Zulu stated that interventions to keep the inflation rate within single digit may entail the Monetary Policy Committee (MPC) employing tight policy direction which may see the Monetary Policy Rate raised slightly from the current 9 percent to further tighten liquidity which is already tight.
“Do we have the right mindset and capability to accelerate growth and sustain inflation rate within desired target band? With the inflation rate already seemingly flying out of the single digit range at 9.9% for the month of December 2022, and global threats of Covid 19 resurfacing, we are to be deliberate and realistic about our set targets.”
“Interventions to keep the inflation rate within single digit may entail the Monetary Policy Committee employing tight or rather contractionary policy direction which may see the MPR raised slightly from the current 9.0 basis points to further tighten liquidity which is already tight. The dilemma is real owing to the fact that Zambia is on the IMF program hence its’ spending is highly being monitored and to some extent supervised,” Mr. Zulu stated.
He said in view of the global threats of inflation and resurfacing Covid-19, Zambia may struggle to achieve a single digit inflation rate, hence the need to focus on measures that can help to balance economic growth and also improving people’s lives.
“Globally growth is actually sliding down and even the World Bank has readjusted their growth target downwards indicating that 2023 may not be a very good year in terms of growth. So Zambia is not in isolation but we must also have our own adjustments done.”
As much as we were ambitious in the initial phases, and whilst we are still solving this debt issue, the solution may lie in compromising on our ambitions to some degree and getting to act on what will achieve the right balance for the betterment of livelihood of our citizens in light of the rising cost of living and emerging global challenges. The customs tax abolishment already seen in the energy sector for petroleum products could signal some affirmation of the indirect subsidy reintroduction in response to the foreseen negative exogenous influence on the availability and cost of living,” he added.
He further said the country should be alive to global trends if it is to make an impactful 2023 in terms of growth levels.
According to Bank of Zambia, inflation rate is expected to come to the target range of 6% to 8% in the first quarter of 2024.
The Central Bank further projects the economy to grow by 4.0 percent in 2023 and 4.1 percent in 2024. Sectors such as Financial and insurance, information and communications, wholesale and retail trade, mining and quarrying, agriculture as well as education underpin the projected growth.