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Zambia records BoP deficit in third quarter of 2008

Zambia records BoP deficit in third quarter of 2008
Written by Fridah Zinyama and Kabanda Chulu
Thursday, November 20, 2008 3:49:19 AM

BANK of Zambia (BoZ) governor Dr Caleb Fundanga has revealed that Zambia’s overall balance of payment (BoP) position recorded a deficit of US$ 120.6 million in the third quarter of 2008.

And Dr Fundanga has urged African governments to maintain the course of economic reforms that has led to the continent’s period of highest growth.

During the 2008 third quarter media briefing in Lusaka yesterday, Dr Fundanga said the BoP deficit could be mainly explained by a decline in the current account balance resulting from lower export earnings.

“In the second quarter, the country had recorded a surplus of US$ 146.1 million,” he said.

Dr Fundanga also said a merchandise trade deficit of US$ 224.8 million was recorded compared to a surplus of US $213.7 million registered in the previous quarter, following a decline in merchandise export earnings and higher import bills.

He said merchandise export earnings, at US $1,037.3 million were 27.8 per cent lower than US $1,437.7 million realised in the previous quarter, following a reduction in metal earnings to US $807.6 million from US $1,214.3 million the previous quarter.

Dr Fundanga said on the other hand, copper export earnings at US $758 million were 32.6 per cent lower than the US $1,124.2 million recorded during the previous quarter, reflecting both a decline in the realised price to US $6,949 per tonne from US $7,850 per tonne and lower export volumes.

“However, on a year-to-date basis, copper receipts at US $2,917.8 million were 14.5 per cent higher than US $2,548 million recorded during the corresponding period in 2007,” he observed.

Dr Fundanga said cobalt exports had also fallen to US $49.5 million during the third quarter of 2008, from US $90 million in the previous quarter mainly due to a decline in the realised price of cobalt to US $19.18 per pound from US $37.85 per pound.

He said the country had recorded non-traditional earnings (NTEs) at US$ 229.7 million, which were 2.8 per cent above the US$223.4 million realised in the second quarter of 2008.

And Dr Fundanga added that the country might experience increased inflationary pressure in the fourth quarter due to lower seasonal supply of fresh vegetables, maize, cereals and tubers, which is typical during the last quarter of the year.

“Pass through effects of the recent depreciation in the exchange rate of the kwacha against the dollar might also affect inflation in this quarter,” he said.

Dr Fundanga, however, said inflation in the third quarter had been triggered by the high cost of food due to an increase in the price of maize and other foodstuffs.

“Non-food inflation outturn resulted in higher prices in rentals, energy, transport and communication among other household goods sub-groups,” he said.

And receiving the 2008 Central Bank award of the Annual Meetings Daily presented to him by African Development Bank president Donald Kaberuka and hosted by the Development Economic Resource in the United States, Dr Fundanga said most African governments had put in place sound regulatory and economic policies, hence most countries in Africa were not directly affected by the global financial crisis.

The Annual Meetings Daily Award is the third in a row for Dr Fundanga after being awarded the 2007 Central Bank Governor of the Year, Global and Africa by the Banker Magazine and the 2007 Central Bank Governor of the Year -Africa by the Emerging Markets Magazine.

And according to the Annual Meetings Daily, Zambia’s monetary policy in the past few years has been designed to have a positive impact on the country’s economy. It stated that the economy was growing due to a number of factors, including the work of the economic management team, favourable commodity prices and the sound macroeconomic policies managed by the BoZ.

Labels: BOZ, CALEB FUNDANGA

posted by MrK @ 3:51 AM