Maravi

Economy is showing signs of recovery - Dr Fundanga

Economy is showing signs of recovery - Dr Fundanga
Written by Chiwoyu Sinyangwe
Monday, August 03, 2009 12:18:22 AM

THE local economy is showing signs of recovery driven by a pick in international commodity prices and increased output in real sectors, Bank of Zambia (BoZ) governor Dr Caleb Fundanga said on Saturday. And Dr Fundanga revealed that the country’s foreign reserves have risen to US $1 billion.

Meanwhile, Dr Fundanga warned that the recently approved electricity tariff hike by Energy Regulation Board (ERB) will put inflationary pressures in the second half of this year.

Addressing the second quarter media briefing at the BoZ stand during this year’s agricultural and commercial show in Lusaka, Dr Fundanga however said the biggest challenge facing the domestic economy was to diversify from over dependence on the mining sector which was susceptible to extreme volatility as witnessed by the recent effects of the global economic meltdown.

“…besides, the good prices of copper, production in the second quarter has also increased by 30 per cent from last December due to the coming on stream of Lumwana while some other mines that were carrying out expansion programmes, these have now come to an end,” Dr Fundanga said. “So, the statistics in the economy are indicating that things are getting better. But what is important now is to move from over dependency on copper which in itself is a curse as we evidenced during the just-ended crisis.”

And Dr Fundanga also said the country’s current foreign reserve position was adequate for the importers and also to inspire confidence to foreign investors.

He also said the position had been boosted by the US $160 million financing facility from International Monetary Fund (IMF) which was disbursed last May to help the country overcome effects of the global crisis, and that negotiations for the second tranche set for next month had continued.

“The official position is about a billion dollars while the private sector…the commercial banks also had US $800 million,” he said. “The kwacha was relatively stable against the US dollar, appreciating by one per cent during the second quarter of 2009 compared with a depreciation of 9.3 per cent in the first quarter of this year, mainly due to reduced demand for foreign exchange from foreign financial institutions.”

Dr Fundanga also said the inflationary pressures for the second half of this year were likely to emanate from increased electricity tariffs and rising oil prices on the international market, although the trends were expected to be mitigated by increased availability of food and expected appreciation of the kwacha against major convertible currencies.

Labels: CALEB FUNDANGA, GREAT DEPRESSION II

posted by MrK @ 11:18 PM