Africa-Press – Zambia. We want Kwacha to gain and maintain stability. The past few days it has been gaining, and sentiments regarding China’s willingness to join debt restructuring negotiations have played a part. Imagine what will happen when our debt gets restructured and we clinch the IMF deal? For now, we cannot tell the exact magnitude of appreciation but let me demonstrate here the impact on ordinary Zambians if it so happens that kwacha moves from K18/dollar to K12/ dollar:
1) Government can restore taxes on fuel and part of the expected increase in fuel prices will be absorbed by Kwacha appreciation. If by then we could have revised fuel procurement, with inefficiencies addressed, this could further absorb the expected increase in fuel prices arising from restoration of taxes.
2) A bag of fertiliser being imported at K800,000 reduces to K533.
3) Edible oils processing machine being imported at K100,000 reduces to K67,000.
4) Small scale mining equipment being imported at K500,000 reduces to K333,000.
5) A dairy cow being imported at K35,000 reduces to K23,000.
6) Saloon merchandise being imported at K20,000 reduces to K13,000.
7) Welding equipment being imported at K30,000 reduces to K20,000.
Addressing macroeconomic economic fundamentals like the exchange rate is key to the success of all these local solutions I have listed. We need to import equipment cheaply so that we can produce and cut down on imports as we expand local production of consumables as well as equipment.
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