Outlook for the Zambian budget.
On October 9, finance minister Alexander Chikwanda presented the 2016 state budget. It predicts strong GDP growth (4.6%) and targets a narrower fiscal deficit (from 6.9% to 3.8% next year), both positive signals to reassure donors, investors and ratings agencies. However, with a general election looming in less than a year and a confluence of economic shocks, his optimistic outlook rings hollow.
Lungu's slim (1.7%) victory in the January presidential by-election increases his vulnerability to populist expenditure pressures.
However, the effects of the economic crunch (such as higher food prices) will be worst in urban areas -- not his core constituency.
Social and infrastructure spending such as the roads programme will instead focus on rural areas.
Opposition divisions, along with backing from former presidents and the Daily Nation newspaper, increase his chances for re-election.
