Lusaka, Zambia – The recent debt restructuring agreement reached by the Zambian government has the potential to alleviate the high cost of living for citizens, according to the Jesuit Centre for Theological Reflection (JCTR). The organization’s Basic Needs and Nutrition Basket (BNNB) report for June 2023 revealed an increase in the cost of living for a family of five in Lusaka. However, the appreciation of the Zambian Kwacha following the debt restructuring announcement brings hope for economic stability and reduced living expenses.
The JCTR’s BNNB for June 2023 recorded a cost of living of K9,239.45, marking an increase of K161.52 compared to the previous month. Price hikes in food items, such as beans, cooking oil, bananas, and fresh milk, contributed to this upward trend. On the other hand, the cost of vegetables and other fruits decreased, while charcoal prices saw a reduction.
Despite these fluctuations, the appreciation of the Zambian Kwacha against major currencies, including the US dollar, signaled increased investor confidence due to the debt restructuring agreement. Additionally, the country’s annual inflation slightly dropped from 9.9 percent in May 2023 to 9.8 percent in June 2023, according to the Zambia Statistics Agency. The Energy Regulation Board (ERB) also observed a slight reduction in pump prices for petroleum products due to lower international oil prices.
While acknowledging the government’s efforts to restore macroeconomic stability, the JCTR commended the steps taken to achieve the debt restructuring agreement and their potential for economic growth, job creation, and improved social services. However, the organization emphasized the importance of ensuring that every Zambian, especially low-income households, benefits from this opportunity to reduce the cost of living.
To address the high cost of living, the JCTR proposed two key recommendations. Firstly, the government should ensure prudent utilization of resources during this period, focusing on improving the cost of living and reducing inequalities. Increasing budget allocations to the agricultural sector and investing in modern farming techniques, irrigation systems, and high-quality seeds and fertilizers can enhance agricultural productivity, leading to lower production costs and decreased prices for agricultural products. This would positively impact consumers, improve food security, and enhance nutrition.
Secondly, while the debt restructuring deal may attract external investments and economic growth, measures should be in place to prevent economic inequalities. Adherence to labor laws, implementation of progressive taxation systems, and tax incentives for local businesses can support small and medium enterprises, generate employment opportunities, and contribute to revenue generation for the country.
As Zambia continues its efforts to restructure its debt portfolio, the JCTR urges the public to remain vigilant and hold the government accountable for transparent and accountable debt management practices. The debt restructuring agreement provides a temporary respite from debt servicing, and it is crucial to ensure transparency and accountability moving forward to prevent a return to the burden of excessive debt.
By pursuing policies and initiatives that stimulate economic growth and prioritizing the common good, Zambia can work towards a more sustainable and affordable cost of living for its citizens.