Ministry of Finance says Zambia’s economic growth is projected to slow down in 2019 due to adverse weather conditions negatively impacting the agriculture and energy sector.
This is after the International Monetary Fund (IMF) cut down its projection of Zambia’s economy in 2019 from 3.1 percent to 2.9 percent.
Minister of Finance Margaret Mwanakatwe said that economic growth in 2018 was robust with Gross Domestic Product (GDP) increasing from 3.5 percent to 3.7 percent although adverse weather conditions affected agricultural input.
The Finance Minister said this during a public engagement meeting with the business community, Civil Society Organizations, Investors, Stakeholders and the media held at Intercontinental hotel.
“Inflation rate in the first quarter of 2019 remained within the target of 6-8 percent. The lower inflation overturn averaged at 7.7 percent from an average of 8.0 percent in the fourth quarter of 2018 was on account of lower non-food inflation as prices of commodities such as fuel remained unchanged,” said Mwanakatwe.
The minister said that going forward, the Bank of Zambia through the use of monetary policy instruments is geared to ensure that inflation is maintained within the set band of 6-8 percent.
The Finance Minister disclosed that despite payment of external debt service which amounted to US$440 million, the reserves in the country stood at US $1.43 billion (1.6 months of import cover) by end of February 2019 from US $1.56 million recorded by end of December 2019.
Mwanakatwe said government is mandated to building up reserves through implementation of measures such as payment of mineral royalty in US dollars and buying of foreign exchange from the market by the Bank of Zambia.
“A further strategy towards reserve accumulation is the purchase of foreign exchange from the market for payment of smaller debt service obligations and other Government procurement adding that government is also working on a mechanism to facilitate payment of debt obligations to China using the Chinese Renminbi and holdings of gold as reserves,’’ Mwanakatwe said.
Mwanakatwe further said the pace of debt accumulation is of concern to the government and that she would re-engage cabinet to propose a moratorium on new non-concessional borrowing and guarantees to attain a sustained fiscal adjustment path in the medium term.
She further said government is fully aware of the economic challenges being faced in the country and would continue with the implementation of legislative reforms such as the enactment of the Planning and Budgeting Bill, amendment of the Zambia Public Procurement Act as well as the Loans and Guarantees Act.
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