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Zambia’s economy may grow faster than govt forecast, says Fundanga

Zambia’s economy may grow faster than govt forecast, says Fundanga
By Fridah Zinyama
Fri 28 May 2010, 07:10 CAT

ZAMBIA’S economy may grow faster than the government forecast this year on higher copper prices and a bumper grain crop, putting the country in a good position to seek its first credit rating, central bank governor Dr Caleb Fundanga has said.

In an interview with Bloomberg on Wednesday in Abidjan, Ivory Coast, Dr Fundanga said the government might sign an agreement with Morgan Chase & Co. this week and they will advise the country on how to proceed with the credit rating.

Zambia had shelved plans for a credit rating in the second half of 2008 following the global financial crisis.

“Copper prices have more than doubled since the beginning of last year, while the government estimated a 42 per cent surge in grain output in 2010. This could push economic growth to between seven per cent and eight per cent in 2010, compared with 6.3 per cent forecast in December,” Dr Fundanga said.

He said the government was optimistic of good economic performance this year due to the good grain crop produced and high copper prices.

“There are reasons why one should be optimistic,” the governor said. “I don’t see why in a year when we have fewer problems we should do less than a year when we had more problems.”

Dr Fundanga said Zambia had produced a grain surplus of one million metric tons this year, which would be exported, boosting foreign currency earnings.

“The credit rating is important for Zambia because it will allow local companies to borrow at more favourable rates abroad,” he said. The government hasn’t decided whether it will also use the rating to sell an international bond.”

Dr Fundanga said the rating would also allow the government to borrow at lower interest rates for major infrastructural projects.

“If there’s an opportunity for the government to borrow to finance critical investment in infrastructure, for example hydropower generation, roads and so forth, there’s no reason why the government can’t borrow,” said Dr Fundanga.

“Debt sustainability ratios are good right now, and our capacity to repay is very good. Still the primary purpose of the rating is to assist our private sector.”

Labels: CALEB FUNDANGA, ECONOMY, GDP

posted by MrK @ 2:58 PM