Goverment should consider establishing a mineral stabilisation fund to cushion the negative impact of falling copper prices on the international market, Economics Association of Zambia (EAZ) says.
The price of copper, which is the mainstay of Zambia’s foreign exchange earnings, has been declining from the highs of about US$8,000 per tonne to between US$4,000 and US$ 5000 on the global market.
However, yesterday, the price jumped by four percent to trade at US$5,043, the highest in 16 months on expectations that policies under US President-elect Donald Trump could spur infrastructure spending.
EAZ national secretary Herryman Moono said the mineral stabilisation fund, which is a mechanism set up by a government or central bank to insulate the domestic economy in case of emergency by using revenue from commodities such as oil or copper, is necessary as it reduces economic pressure.
In 2007, Chile, the world’s top producer and copper exporter, established the Economic and Social Stabilisation Fund (ESSF) with an initial injection of US$2.58 billion, to finance fiscal deficits, amortise public debt and to mitigate the impact of revenue volatility derived from fluctuations in copper prices on the international market.
“If we had a stabilisation fund, we would not have gone to the international market to get the Eurobonds and we would not be looking for a bailout package from the International Monetary Fund (IMF) to revive the economy currently under pressure due to falling copper prices on the global market…We need to save for a rainy day,” Mr Moono said.
He said this yesterday on the sidelines of the civil society organisations (CSOs) discussion on the proposed economic recovery programme.
Mr Moono also said Government needs sound fiscal management and policy consistency to achieve the objectives of the economic recovery plan and subsequently economic growth.
Meanwhile, JCTR social economic and development programmes officer Sharon Chileshe said Government needs to strengthen pro-poor policies.