Govt blames FNDP hiccups on high lending rates

COMMENT - 'grow the economy'- translation: let the foreign mining companies pillage Zambia's resources without the Zambian economy or people benefiting from it. The truth is that Zambia cannot develop or grow under this current neoliberal, oligarchy driven system.

Govt blames FNDP hiccups on high lending rates
By Mutale Kapekele
Mon 07 Feb. 2011, 04:00 CAT

THE government says high levels of lending rates and the limited availability of long-term finance were the major constraints to growth, particularly for small to medium-scale enterprises during the implementation period of the Fifth National Development Plan.

The country aspired to grow the economy by seven per cent during the FNDP implementation period but only managed an average of six per cent with the exception of 2010 which recorded 7.1 per cent.

According to the executive summary of the Sixth National Development Plan (SNDP), the implementation of envisaged fiscal outlays also proved to be a challenge during the FNDP period, due to shortfalls in domestic revenues and grants from cooperating partners.

“Over the FNDP period, current expenditures were actually higher than domestically generated revenues. As a result, fiscal deficit averaged 1.9 per cent of Gross Domestic Product (GDP) during the period against the FNDP average target of 1.7 per cent,” the government reports.

“Domestic debt increased by 25.9 per cent to K10, 455.22 billion as at end of December 2009 from K7,720.42 billion at the beginning of the FNDP period. However, as a proportion of GDP, domestic debt fell from 20 per cent in 2006 to 16.2 per cent in 2009.”

The government states that the labour force increased by 10 per cent from 4.9 million in 2005 to 5.4 million in 2008 while total employment grew by 26.4 per cent to 5.2 million in 2008 from 4.1 million in 2005 with male employment in the formal sector accounting for 71 per cent compared to 29 per cent for females.

The government reports that the country’s current account deficit averaged 4.8 per cent of GDP compared to 11.3 per cent of GDP during the Poverty Reduction Strategy Paper and in 2009 it further narrowed to 3.2 per cent of GDP.

The government further states that the total national external debt increased by 16.1 per cent from US$2,014.4 million in 2006 to US$3,407.3 million at end 2009 “on account of a higher increase in private and parastatal debt of over 100 per cent from US $1, 084.0 million in 2006 to US $2,250.4 million in 2009 while the public debt increased by 24.4 per cent from US$930 million in 2006 to US$1, 156.9 million in 2009.”

The government states that the country’s per income increased from US$680 in 2006 to an estimated US$970 in 2009, only slightly below the lower middle-income threshold of US$995.