There is hard time ahead, Zambia owing $8.4 billion to our creditors – Dr. Mbita Chitala

The $1.3 billion extended credit facility or overdraft for 38 months and its painful austere conditionalities is aimed to help us have the due debt cancelled or deferred or paid.

How, our leaders must tell us. What we should however be prepared is to really sacrifice our happiness as the austerity measures our government has agreed to unleash will be really painful.

Our government has agreed to move our economy from the 6% deficit to 3.2% surplus within three years. This will be done by cutting expenditures and raising taxes. Tax to GDP ratio will rise to 3.4%. Corporate taxes will reduce from 4.5% to 4.2%.

There will be no VAT exemptions on such basic needs as medicines, food etc. The wage bill will marginally rise from 8.1% to 8.6% even as the average ought to be 9%.

Taxes on labour will go up. Subsidies on electricity will end by December to reflect cost of provision. Fuel subsidies will end as from this month. FISP will be cut as well as any subsidies to our farmers. The government will enact a PPP Act to introduce user fees for public services.

The Social Cash Transfer will marginally increase from K90 to K110 per month. On signing to these conditions, Zambia will receive the first $185 million to help in our balance of payments challenges. That is to service some of our debts.

At the same time, the World Bank has announced to give us some loans and budget support grants. We also hope other multi laterals and bilateral as well as FDI will come in to support our program.

This is a summary of the economy we should all prepare to endure. Austerity and sacrifice. Tears and pain. Cry my beloved country indeed.