They usually refer to the financial crisis and developments in other countries as a warning example of how badly things can go if one allows debt to build up and housing prices to rise. They then express concern for Swedish household sector debt and say – without mentioning the research that has shown that monetary policy has very little effect on housing prices and debt – that a higher repo rate is necessary to prevent developments similar to those in the countries that were hit hardest in the financial crisis. Sometimes one adds an argument that basically states that even if we cannot see any immediate threats in Sweden at present, this does not mean that they do not exist. In many of the countries where things have gone very badly, people did not see the risks, they say, so not seeing a risk doesn’t mean there isn’t one – a variation of the argument that “this time is (not) different”.12 Let me emphasise that I certainly do not mean that risks linked to high indebtedness should be ignored. In the light of events in recent years I find it difficult to imagine that anyone would fail to agree that governments, legislators and financial supervisory authorities should do everything in their power to prevent and limit the consequences of future crises. But I nevertheless feel that the argument that household debt entails major risks and needs to be addressed must be substantiated in a sufficiently convincing manner.
Further, the Government is actively engaging new investors to take over the running of the closed mining operations as well as negotiating with the owners of the bigger mines on modalities of continuing with operations at the mines to forestall further job losses. The 2009 Budget has prioritised infrastructure development with the view to opening investment opportunities for diversification, particularly in agriculture, tourism, and manufacturing sectors. Some specific measures include the following: Agricultural sector: Increased allocation of funds to the sector for livestock development and creation of at least one disease-free livestock zone, Farm Block infrastructural development and irrigation projects. Further, the value added tax on selected agricultural equipment and spares, has been zero rated as incentive to increase agricultural production and productivity. Tourism sector: In order to diversify the economy and attain broad based economic growth, Government has 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. 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. The construction of the Chambishi MFEZ has already commenced.