In order to save Zambia from its economic turmoil, president Edgar Lungu pledged to remove or reduce energy and agricultural subsidies in order to acquire a loan from the IMF to the value of $1,2 billion, his spokesperson, Amos Chanda said.
“The president has promised to move rapidly to either do completely away with subsidies or progressively reduce them,” Chanda said.
These cuts would be a massive blow for agriculture since maize production by small-scale farmers in the country has been massively supported by these subsidies, allowing the country to export large amounts to their neighbours like Zimbabwe and Malawi.
The re-elected president will need to cut the budget deficit that expanded to almost 10 percent of GDP last year, with the country’s economic growth that slowed down to 3 %, the lowest since 1998.
The Zambian kwacha has fallen with 25% against the dollar over the past year, pushing inflation over 20%. The main reason for these losses is mainly due to the national trade deficit and the new monetary policy.