Friday, October 30, 2009
By Fridah Zinyama
Fri 30 Oct. 2009, 04:01 CAT
THE IMF has announced that it has reached an understanding on macroeconomic and structural policies for 2010 that will pave way for the completion of the third review under Zambia’s Poverty Reduction Growth Facility (PRGF).
The International Monetary Fund (IMF) executive board is expected to discuss the third review under the PRGF arrangement and the 2009 Article IV consultation by late December 2009.
An IMF mission visited Lusaka between October 15 and October 28 to conduct the discussions for the 2009 Article IV consultation and for the third review of Zambia’s PRGF with the IMF.
The mission met with Minister of Finance and National Planning Dr Situmbeko Musokotwane, Bank of Zambia governor Dr Caleb Fundanga, other senior officials and representatives of the business community, labour unions, civil society and Zambia’s co-operating partners.
IMF mission chief for Zambia George Tsibouris in a press statement expressed happiness at the progress made on macroeconomic and structural policies for 2010.
“Against the background of the global financial economic crisis, the Zambian economy has shown considerable resilience, and economic growth is now expected to exceed five per cent in 2009,” he stated. “Mining and agriculture have shown strong gains in ouput; nonetheless, there have been job losses in mining and some financial difficulties in the agricultural sector.”
Tsibouris stated that the country’s inflation level was moderating, mainly assisted by softening food prices and a limited reversal of the earlier depreciation of the kwacha.
“The revised inflation target of 12 per cent by end 2009 is well within reach,” he stated. “The external position has also strengthened both because of the earlier than expected recovery in copper prices and the exchange rate related compression of imports.”
Tsibouris stated that Zambia’s reserve position at about US $1.7 billion was now stronger than it had been in almost four decades, thanks in part to the recent Special Drawings Rights (SDR) allocation of US $629 million from the IMF.
“While the overall performance of the economy has held up well, government revenue collections, particularly of import related taxes have fallen short of expectations,” he noted. “In order to preserve targets for domestically financed capital spending, the government has accessed some financing from Bank of Zambia.”
Tsibouris stated that the Zambian government needed to be commended for the way it handled the fiscal policy in 2009, although there had been some delays in the disbursement of donor aid, both budget and sector support which had further hampered government’s ability to meet spending targets.