Further, the value added tax on selected agricultural equipment and spares, was zero rated as incentive to increase agricultural production and productivity. (ii)  Tourism sector: – In order to diversify the economy and attain broad based economic growth, Government increased the allocation to the sector to improve access to the Northern Tourism Circuit (infrastructural development in Mbala and Kasaba Bay). Further, Government will embark on the development of a new world class tourism area in Livingstone, and step-up the development of road infrastructure in key national parks namely, Luangwa and Kafue. (iii)  Manufacturing: – In order to expand the manufacturing base, Government is promoting the establishment of Multi-Facility Economic Zones (MFEZ) on the Copperbelt (Chambishi), and Lusaka (Lusaka south and east) provinces by providing for fiscal incentives and quality infrastructure development in the budget. Operations at the Chambishi MFEZ have already commenced. Further, the budget reclassified and re-categorised certain manufacturing materials with the aim of lowering customs duty rates. (iv)  Mining sector: – In light of the adverse impact of the global economic crisis on the mining sector and with the view of easing these effects, the Zambian Government introduced tax concessions, which included removal of the windfall tax, increasing capital allowance to 100 percent as an investment incentive, and reduction of customs duty on Heavy Fuel Oils.
Problems may arise, however, if monetary policy is perceived as  BIS Review 32/1997  -5-  The Phillips curve T h e P h illip c u r ve In f latio n  *B *  A  U n e m p lo ym e n t  In f latio n  *  B  *C  U n e m p lo ym e n t  BIS Review 32/1997  -6-  focusing primarily on the stabilisation of employment. As we have seen, people’s expectations play a major part in the inflation process. If people expect monetary policy to concentrate in the first place on stabilising employment, then firms and employees will not regard unduly high wage increases as all that serious because they will count on measures being taken to stimulate demand if employment is in danger. Sweden in the 1970s and ’80s is a good illustration of the problems that may arise. Wage and price increases in that period were systematically higher than in other countries, which led to recurrent cost crises and problems with competitiveness. An important reason for the lack of adjustment to wage increases in the rest of the world was that employees and firms reckoned that the government and the Riksbank would ultimately bail them out with devaluations, which is what actually happened.