Economist, Dr. Patrick Asuming is of the view that businesses may delay in investing in the first quarter of the year to observe the conclusions of the International Monetary Fund (IMF) programme before increasing financial inflows.
This, he said could slow economic activities if government does not move quickly to boost investor confidence.
Speaking to Joy Business, Dr. Asuming stated that financial institutions may also react by tightening financing to the private sector.
He explained that the phenomenon should be expected as businesses always look at government projections to plan.
“I think overall, businesses will probably want to put on hold any major investment that requires financing from the banks because of the ongoing discussions about the Debt Exchange Pogramme”, he said.
He is of the view that the programme will change the strength and lending pattern of the banks.
Dr. Asuming stated that it will be normal to see banks tighten financing to the private sector until financial sector players assess the impact of the programme on their operations.
He cautioned that businesses that wish to overcome financial challenges must be moderate in their expansion drive to avert challenges.
“It is important for them to plan carefully and then maybe minimize their planned expansions and the business investment for the mean time”, he said.