Walking a Tight Rope to Economic Recovery “Restoring Fiscal Fitness for Sustained Inclusive Growth and Development”

A clear link was established between the 2017 National Budget speech and the medium-term Economic Recovery Programme dubbed “Zambia Plus”. The budget, in this regard, will be as a key instrument for establishing a foundation for economic recovery and eventual sustained and inclusive growth over 3-5 years. Zambia Plus is described as a home grown programme for soliciting external or development partner support, hence the plus component. Both the budget and Zambia Plus are consistent with a key tenet of International Monetary Fund (IMF) assistance, which provides that support to member States will be for three year periods. The five pillars of Zambia Plus have been treated to varying degrees in different parts of this analysis so far. Pillars Three and five is specifically focused on with a view to emphasizing the imperative of implementing key measures for putting Zambia on the path to economic recovery. Pillar Three focuses on improving economic and fiscal governance by raising the levels of accountability and transparency in the allocation and use of public finances. Pillar Five focused on ensuring greater economic stability, growth and job creation through policy consistency to raise confidence for sustained private sector investment. The fifth pillar therefore links to the growth, stability and job creation macroeconomic objective in the budget. The short-term stability objective is mainly reflected through the inflation and gross international reserves targets. On this, in 2017, monetary policy “will remain focused on maintenance of price and financial system stability in order to support restoration of macroeconomic stability and growth”. Beyond this, monetary policy adjustments will only be made in order to re-align it in accordance with the fiscal consolidation drive. This holds some promise for re-introducing consistency and coherence between fiscal and monetary policy.