The Patriots for Economic Progress (PeP) notes that Government has failed to arrest the widening fiscal deficit.
And the party doubts how sustainable the reduction of policy rate to 11 percent and the Statutory Reserve Ratio to 9% is in the medium to long-term given that all economic indicators are pointing towards an upward inflationary trend as well as a widening fiscal deficit.
PeP President Enock Tembo says it is a well established fact that monetary policy cannot work in the absence of fiscal discipline, as the case is at the moment.
Mr. Tembo expects that the Bank of Zambia should have waited until the inflationary impact of ZESCO’s 75 percent increment in electricity tariffs has fully trickled down to the rest of the economy around December 2017, before making any rush adjustments in the monetary policy parameters.
He says it is also worth noting that the existing large fiscal deficit makes the economy weak, fragile and susceptible to shocks.
The PeP President, who is also an Economist, suggests that the Central Bank should have waited until this widening fiscal deficit has reasonably been addressed by Government, before embarking on an ambitious path of monetary policy easing.