Zambia announces economic booster of US$ 439 million

(2 minutes read)

· Zambia’s cabinet approved a US $439 million economic stimulus package to boost the pandemic ridden economy.

· The financing will be through a COVID-19 bond to be issued by the central bank.

Zambia’s cabinet approved US $439 million economic stimulus package to boost the pandemic ridden economy. The financing will be through a COVID-19 bond to be issued by the central bank.

Zambia has been struggling with growing public debt even before the onset of coronavirus. The lock down across the world due to Covid-19 crippled international demand for raw materials, particularly copper. Zambia is a major producer of copper and other raw materials. The proceeds from the bond will be used to finance payment of retirees, contractors and suppliers, which have been hit by reduced liquidity due to COVID-19. Zambia estimates that its budget revenue is expected to fall short of target by close to 20% as a result of economic djustments due to COVID-19.

Though Zambia has cases of Covid-19 far less than other countries in the world and even in Africa, the impact is severe on account of the financial difficulties faced by the country even before the Covid-19 had set in. Some critical segments like mining, power, and manufacturing have been showing lackluster growth for quite some time. The central bank projected in May gross domestic product (GDP) would shrink 2.6% in 2020, its first economic contraction in more than 20 years.