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By Meluse Kapatamoyo in Lusaka

Inflation in Zambia has soared to double digits and the local currency, the kwacha, has depreciated against major foreign currencies, and analysts have blamed President Levy Mwanawasa’s continued ill-health for the changes.

Mwanawasa is currently hospitalised in a French military hospital in Paris, where he was flown to on July 2 after suffering his second stroke on June 29, the eve of the African Union (AU) summit in Egypt.

In a statement made to parliament last week, Health Minister Dr Brian Chituwo who recently visited the President, said that although Mwanawasa was in a stable condition, he remained heavily sedated and his healing would take long.

“Saying Mwanawasa’s illness has not had any impact on the economy is denying to accept reality. Everyone is nervous. I am not only talking about the citizens of this country but investors as well. For them, it has now became a wait and see situation before they can pour in their investments into this country,” said an economist who preferred anonymity.

Since Mwanawasa’s stroke, Zambia’s inflation has risen to 12.6 percent, up by 0.5 percentage points from June, according to the Central Statistical Office.

In addition, the kwacha, which was trading at 3,100 to US$1 before Mwanawasa’s illness, has depreciated to around 3,600 per US$1.

While there are arguments that Zambia’s inflation rate started its upward move early this year when fuel prices hit record highs, analysts maintain that Mwanawasa’s health has played a major factor.

But University of Zambia economics professor Oliver Saasa told The Southern Times: “Demand and supply are playing a serious role on the market. So from an economic point of view, it’s not easy to attribute the kwacha’s depreciation to rumours surrounding the president’s health because there is a high foreign currency on the local market.”

Despite the rising inflation, government has insisted that the ambitious target to attain a 7 percent annual economic growth and reduce inflation to the same percentage is achievable.

Bank of Zambia governor, Caleb Fundanga said although it was expected of people to hold onto their money and to stockpile foreign currencies in present circumstances, government had US$2 billion in reserves to sell in the market if a shortage of foreign currency occurred.

He told journalists:” When something happens to the president, there is always speculation … but his illness will not affect Zambia’s economy. People shouldn’t worry because government has put in place quality economic reforms and prudent investment policies to ensure the country’s economy and investment inflow is not affected in any way.”

Fundanga said nothing would change in the absence of Mwanawasa because government had already set-up systems that guaranteed investor confidence and could not derail economic growth or chase away investors.