Govt's economic reforms are fair, says Sichinga
By Kabanda Chulu
Sat 13 Apr. 2013, 14:01 CAT
COMMENT - Actually it's the Economist Intelligence Unit, part of the Economist Group, whose board has direct links to De Beers. Apparently the monitoring of actual exports makes the EIU 'nervous'. Or as the rap song said "The wood starts to creak, and out come the freaks." De Beers smuggles a lot of diamonds and other materials.
THE GOVERNMENT's economic reform programme is fair and offering some of the most attractive incentives in Africa, says agriculture minister Robert Sichinga.
Reacting to assertions by
Economic Intelligence Unit (EIU) representative Sheila Rai that investors were
nervous about signs of regulatory controls that seemed to place capital restrictions on investors, Sichinga said the ongoing reforms in the economy were intended to make the playing field fairer and to encourage more foreign invenstment and ensure mutual benefit for both investors and Zambians.
"There are no capital controls and there are no restrictions whatsoever regarding profits that investors make. What we have done is simply to empower the reserve bank (Bank of Zambia) with an instrument to monitor the value of exports. We want to know for purposes of normal regulatory function that every government performs," Sichinga said during the joint Business Council for Africa (BCA)-Zambia High Commission investment forum held at Zambia House in London.
According to a statement released yesterday by press secretary Amos Chanda, Sichinga said Zambia had only a single agency (Central Statistical Office) that recorded export and import figures.
"But we have now created an instrument that empowers the reserve bank to check on these figures. This does not mean that investors will face any restrictions. Once they have paid the due taxes and met other statutory obligations, they can repartriate their profits," he said.
Sichinga extended invitations to British investors to explore the attractive opportunities Zambia was offering through the planned farming blocks across the country.
"We have enquiries from the Middle East, China, India and America regarding the aqusisition of land for them to produce food for their people.But the United Kingdom has been very slow. We are moving on and I urge you to respond. Our policy is to invite all and exclude none. The UK has a comparative advantage and I urge you to move faster," he said.
Labels: ECONOMIST INTELLIGENCE UNIT, ROBERT SICHINGA, SHEILA RAI
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Extract from the Economist Intelligence Unit report on Zambia Outlook for period 2012-2016
TIME PUBLISHED - Tuesday, May 29, 2012, 12:52 pm
Economist Intelligence Unit published their outlook report on Zambia during the month of may. Below are some extracts from the report for their outlook for the period from 2012 to 2016
Political outlook
Political stability
President Michael Sata’s victory, which ended two decades of rule by the Movement for Multiparty Democracy (MMD), was underpinned by the perception that economic growth under the MMD largely benefited the political elite and foreign investors. His first term is, therefore, likely to be dominated by three issues, namely Tackling corruption,Redistributing wealth and Cutting unemployment.
The PF’s parliamentary representation is set to grow slightly, as the party has had some success in its appeal against the election results in constituencies that were won by the MMD. The government attempted to deregister the MMD, on highly questionable grounds. Our core scenario is that the courts will block this or the government will back down. If not, political checks and balances in Zambia would be severely weakened.
Finally, Mr Sata’s campaign pledge to put more money in people’s pockets has raised expectations among his supporters, if there is little tangible change over the next year, urban unrest could arise.
Although Mr Sata has toned down his pro-labour rhetoric,the mining sector has continued to face regular strikes over wages and working conditions. High global copper prices are likely to have been a factor in stoking discontent, and sporadic unrest is likely to continue as long as copper prices stay high.
Finally, Mr Sata’s campaign pledge to put more money in people’s pockets has raised expectations among his supporters, if there is little tangible change over the next year, urban unrest could arise.
Election Watch
The next round of elections is due in 2016. The vote is expected to be free and fair, but the run-up to voting is likely to be marred by bias in the state-owned media and the incumbents’ use of public resources to fund their campaigns.
Some election-related violence could occur but widespread violence would be unlikely—Zambia does not have a history of severe vote-rigging or incumbents ignoring election outcomes. The result of the elections will depend on whether the PF lives up to its campaign promises and whether the MMD is able to revamp its image, which has been battered by allegations of corruption.
Some election-related violence could occur but widespread violence would be unlikely—Zambia does not have a history of severe vote-rigging or incumbents ignoring election outcomes.
The first draft of the revised constitution includes a clause changing the system for presidential elections from first-past-the-post to one in which the winning candidate would require more than 50% of the vote. If retained, this would weaken the advantages of incumbency, as a fragmented opposition would no longer guarantee victory for the ruling party. The draft also seeks to change the parliamentary vote from first-past-the-post to proportional representation; under the latter, the composition of parliament would more closely reflect voting patterns.
International Relations
Mr Sata, formerly a fervent critic of Chinese investors, has now softened his position substantially—an implicit recognition of China’s importance as a source of investment. Relations with Western donors could be undermined if abuses of office occurred under the new government. Zambia is expected to remain largely on good terms with other countries in the region. Mr Sata has expressed support for Zimbabwe’s president, Robert Mugabe, placing him among a number of his peers in SADC but at odds with South Africa.
Relations between Zambia and the EU are expected to sour following accusations by Mr Sata that EU diplomats have interfered in Zambia’s internal affairs. This followed a meeting between the leaders of the main opposition parties and the EU head of delegation, Gilles Hervio.
However, it is in line with his general approach—the president has made U-turns on a number of issues, notably relations with China and mining taxation, for the sake of expediency.
The EU has not confirmed what the meeting was about, although The Post reported that it was held to discuss the suspension of the three judges. Mr Sata’s remarks are striking given that he met with several diplomats when he was in opposition, prior to his election victory in September 2011.
However, it is in line with his general approach—the president has made U-turns on a number of issues, notably relations with China and mining taxation, for the sake of expediency.
The incident is not expected to jeopardise Zambia’s access to aid. However, it does come on the back of other developments that are likely to have been of concern to donors, and aid inflows could be undermined if this trend continues. Notable among these is the ongoing attempt to deregister the largest opposition party, the Movement for Multiparty Democracy (MMD).
Economic policy outlook
Policy trends
The government is likely to strike a balance between meeting the expectations of its supporters—less inequality, better industrial regulation and lower unemployment—and sustaining investment and growth. However, there is some risk that it will introduce policies that are poorly designed or counter-productive, which would undermine growth. In line with the central scenario,it is expected to stick to a market-orientated agenda and maintain macroeconomic stability.
Recent public-sector pay increases have been well in excess of inflation, but this state of affairs is not expected to continue over the rest of the forecast period.
Drastic changes in mining policy are not expected,but some measures will be taken to boost revenue from the sector (partly by ensuring better compliance with existing tax rates) and improve working conditions.
The 2012 budget has raised mineral royalty rates from 3% to 6% for base metals and to 5% for precious minerals. Further modest increases in mining taxes could be made in 2013-16 ifcopper prices stay high, as the Economist Intelligence Unit forecasts. The government has also said that it will negotiate increases in its stakes in the mines to 35% (from 10-20.6% at present) and may introduce restrictions on the repatriation of export earnings.
Chart showing Zambia's decreasing Aid and Increasing Fiscal revenue over the years
Chart showing Zambia's steady decreasing Aid and Increasing Fiscal revenue over the years
The reaction of mining companies to these policies has been muted, and we believe that the changes are likely to be accepted, although if handled badly (if, for example, the government were to renege on its commitment to increase its stakes in the mines via negotiation rather than coercion), investment in the sector could fall.
Infrastructure will improve gradually as investments are made in power supply and roads. Power generation is expected to grow by 50% in 2012-16,reducing the frequency of power cuts but not eliminating them. The fiscal incentives on investments in the “priority sectors” have been retained but could be lowered, as the threshold of US$500,000 for eligibility means that these tend mostly to favour foreign companies. Despite high levels of public spending on education, progress in improving its quality and relevance is likely to be slow.
Agriculture will remain high on the government’s agenda. Fertiliser subsidies will be retained but their share of the agriculture budget is set to fall slightly.
Although the subsidy scheme has allowed maize production to rise sharply, it is flawed: targeting is poor; a blanket support scheme for maize is inappropriate given that Zambia has three agro-ecological zones, each suited to different crops; and the impact on productivity has been weak. The government has acknowledged some of these issues and agricultural policy could become more effective over the forecast period.
Public-sector workers receive large pay increases
In April the government agreed to raise basic salaries for civil servants by 4-15%, to peg housing allowances to 20% of basic salaries and to introduce a transport allowance equivalent to 10% of basic salaries. This followed hefty wage increases for public health workers earlier in the year (February 2012, Economic performance). The wage increases do not seem to have been fully budgeted for—the government initially offered civil servants a 4% increase, but this was rejected—and no details have been provided of the cost to the exchequer or the implications for the fiscal deficit.
The increases are consistent with the campaign pledge of the ruling Patriotic Front (PF) to put more money in people’s pockets, but raise questions about whether the government is capable of balancing this objective against the need to maintain macroeconomic stability.
In response to the wage increase we have revised our forecast of the fiscal deficit in 2012 from 5.9% of GDP to 6.2%; this is based on the assumption that capital spending will be lower than projected in order to counter some of the impact of the wage increase. Despite this, debt-servicing capacity is expected to stay intact, partly because the debt stock has been fairly small ever since Zambia received debt relief in 2005—it stood at an estimated 27.3% of GDP at end 2011—and partly because fiscal revenue is likely to be supported by strong economic growth.
However, if uncertainty about the direction of economic policy were to increase, undermining investor confidence, this would prompt a revision to our outlook for sovereign creditworthiness.
Fiscal policy
Fiscal policy will be expansionary in 2012-13. The government projects the deficit at 5.6% in 2012 as expenditure grows by 30% while domestic revenue and grants grow by 25% and 19% respectively. Expenditure overruns are likely following the recent hefty wage increases for civil servants and public-sector health workers, although we expect that this will be partly offset by lower than budgeted capital spending. Overall, we forecast a deficit of 6.2% of GDP (previously 5.9%) in 2012.
Thereafter, growth in public spending is expected to moderate, picking up slightly in the run-up to the election in 2016. Revenue growth will be robust, in line with economic trends. Grants are expected to grow steadily but to finance a smaller share of the budget (6.4% by 2016). The fiscal deficit is forecast to moderate to 2.6% of GDP by 2015, before picking up to 3.4% in 2016.
Public debt is forecast to rise from 27.3% of GDP in 2011 to 35.4% by 2016. Public debt-servicing capacity is expected to stay intact over the medium term, although a failure to invest borrowed funds wisely could undermine longer-term debt sustainability.
Zambia's Foreign Reserves trend
Zambia's Foreign Exchange Reserves trend
Monetary policy
The Bank of Zambia (BoZ, the central bank) will focus on keeping inflation within single digits. It will be helped by fairly stable global commodity prices,which will allow it to cut its benchmark interest rate slightly over the forecast period. The benchmark rate, currently set at 9%, was introduced in late March,
However, financial markets are thin and supply-side factors and monetary aggregates will remain important determinants of prices. The rebasing of the Zambian kwacha—1,000 units of the present currency would be equal to one unit of the new currency—is scheduled for 2012. The replacement of current banknotes with the new currency is to take place over a two-year transition period.
Chart showing Zambian kwacha's the exchange rate trend and Inflation
Chart showing Zambian kwacha's the exchange rate trend and Inflation
Economic growth
Real GDP growth is forecast to moderate to 5.9% (previously 6.3%) in 2012 as erratic rainfall damages the maize harvest. A sharper slowdown is not expected because of investments in power and mining and rapid growth in public spending.
Growth is expected to increase to an average of 6.9% in m2013-16. The main drivers will be agriculture, construction and mining. Agricultural growth will be underpinned by a public-spending push, the recent reduction in the corporate tax rate in the sector from 15% to 10% and the potential offered by Zambia’s vast tracts of uncultivated arable land and abundant fresh water.
Growth in mining will soar in 2014-15 as investments at the Kansanshi, Lumwana and Konkola mines, as well as First Quantum’s new Trident mine, approach completion. Our forecast allows for delays in these projects, and growth would be higher if they were completed on time.
Construction growth is expected to average 12.5% in 2012-14, driven primarily by planned investments in mining and power, and to edge down after that to 7% in 2016 as mining investment subsides after a period of strong growth. Services and manufacturing (which consists mainly of agro-processing) are expected to grow at an average of 5.9% per year.
The former will be driven by telecommunications, financial services, retail and the public sector, and the latter by copper output, investments in the multi-facility economic zones (MFEZs) and financial incentives for investment in the priority sectors. Growth would be lower in the event of a drought, if the incidence of strikes were to escalate, if the euro zone were to collapse or if the incidence of politicised decision-making were to increase, deterring investors.
Charts showing Annual GDP growth and Comsumer Price Index
Charts showing Annual GDP growth and Comsumer Price Index
Zambia still exports maize even as bad weather cuts yield
Zambia’s output of the staple food, maize, is expected to decline by 11%, from 3.2m tonnes in 2011 to 2.85m tonnes in 2012, according to the minister of agriculture and livestock, Emmanuel Chenda. It will, however, continue to exceed the domestic consumption requirement of roughly 2.6m tonnes.
This will help to keep domestic food prices in check, although the continued rise in global oil prices in 2012 will raise the cost of transporting food from surplus regions to deficit regions, putting some pressure on prices. The decline in production has been driven primarily by poor rainfall—maize cultivation in Zambia remains largely rainfed.
It is also due to a 34% decline in the area of land cultivated with maize by commercial farmers, although this will have been less significant, as commercial farmers account for only about 20% of maize production. Official data indicate that commercial farmers have been shifting towards more lucrative crops such as cotton, production of which is expected to rise by 122% to 269,502 tonnes in 2012, and soya beans, whose output is expected to increase by 74% to 203,038 tonnes.
Chart showing the Maize trend ouput and interventions over the years
Chart showing the Maize trend ouput and interventions over the years
Inflation
Inflation averaged 8.7% in 2011 as production of the staple food, maize, vastly exceeded domestic demand, keeping food prices in check, but fuel and electricity prices soared. Domestic maize production will continue to exceed demand, keeping food prices fairly stable.
However, expansionary fiscal policy and further rises in electricity tariffs will stoke inflation in 2012. In 2013-15 inflation is expected to ease as growth in electricity prices slows (following large increases in previous years as tariffs were raised towards cost-recovery levels) and fiscal policy is tightened. It is expected to pick up in 2016 as public spending growth increases in the run-up to the election.
In March we revised our inflation forecasts following the adoption of a rebased consumer price index (CPI). The new CPI is based on consumption patterns in 2002/03, compared with 1994 previously. As expected, food’s share of consumption has declined, from 57% to 53%, as income levels have increased. Food inflation is lower than non-food inflation—a trend that is set to continue—so the new weights will tend to boost inflation estimates.
This effect will, however, be offset by the “formula effect” of using geometric means to calculate item indices instead of arithmetic means—the former incorporates the impact of price changes on consumption patterns. The net effect will be to lower inflation estimates.
In line with this, we forecast inflation at 7.1% in 2012 and at an average of 7% in 2013-16. Further modest revisions are likely as the impact of the new formula—which varies in line with the dispersion of price changes—becomes clearer.
Zambia's imports sources and export destinationations
Zambia's imports sources and export destinationations
Exchange rates
The kwacha’s value will be supported by strong growth in copper production (particularly in 2014-16), large foreign investment inflows and high public external borrowing. This will be offset by robust import demand, a stronger US dollar and slower growth in copper prices.
Overall, the kwacha is forecast to depreciate by 10% to ZK5,345:US$1 in 2012 as uncertainty about global economic prospects and domestic policy undermine confidence in the currency, and more gradually, to ZK6,274:US$1 by 2016, as copper exports rise sharply following the completion of major mining projects.
The dominance of copper in the export basket will continue to expose the currency to external shocks. The planned rebasing of the kwacha will alter the value of our forecasts—for example, from ZK5,642:US$1 to ZK5.64:US$1 for 2013—although their substance would remain unchanged.
External sector
The current account is forecast to return to deficit, of 3% of GDP in 2012 and 2.8% of GDP in 2013, as growth in the production of copper (which accounts for more than 80% of exports) slows while imports continue to grow robustly, supported by high domestic demand and investment.
Thereafter, the deficit is forecast to decline, with the current account going into modest surplus in 2015-16 as exports increase by over 50%. This will be driven mainly by a sharp rise in copper production as major mining projects are completed, but also by modest growth in copper prices and slightly higher non-traditional exports.
The services deficit is forecast to widen as growth in tourism is outweighed by a rise in services debits (in line with goods imports). The income deficit is expected to grow steadily as profits at the mines rise, boosting income debits. Transfer inflows are forecast to increase in line with aid, but will remain small and will have little impact on trends in the current account.
Labels: ECONOMIST INTELLIGENCE UNIT, MICHAEL SATA
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EIU is an imperialist sponsored organization, says Wynter Kabimba as he dismisses their poll prediction
TIME PUBLISHED - Thursday, August 18, 2011, 3:08 pm
The Patriotic Front (PF) has dismissed the observations of the Economic Intelligence Unit -EIU- , which has continuously stated that President Rupiah Banda and the MMD will win the September 20, general polls.
PF Secretary General Wynter Kabimba says the EIU is an imperialist sponsored organization, whose aim is to protect western companies which have invested in Zambia. Mr Kabimba says the PF will not be disturbed by the publication’s observations because it has done its ground work ahead of next month’s elections.
He told ZNBC that the PF is a credible party which has managed to field Parliamentary candidates in all the 150 constituencies.
The Economic Intelligence Unit -EIU- says a victory for the opposition Patriotic Front-PF and its leader Michael Sata in the September 20 general elections poses a high risk for Zambia.
This is because of the uncertainty about the policy agenda that PF leader, Mr Sata will implement, citing his alleged indecision on issues like mining taxation.
The August report from the economic analysis organisation, which covers 185 countries, said President Banda’s victory remained the most likely outcome as he would benefit from the advantages of incumbency, the MMD’s formidable electoral machinery and recent maize bumper harvests.
“The elections will be closely contested but are slightly more likely to deliver a victory to the president, Rupiah Banda and the ruling MMD,” the report states.
According to the report, “a Sata presidency would pose certain risks, and that he may not be able to deliver on his campaign slogan of “more money in your pockets” due to fiscal constraints.
It states that Mr Sata’s often justified demands for wage increases could stoke labour unrest, especially in the Copperbelt.
The EIU report says Mr Sata had also been unclear on issues like mining taxation and appeared to be “fairly heavy-handed” in his approach to governance which posed significant risks.
Mr Sata’s nationalist rhetoric, such as an assertion in 2008 that Zambians should hold a 25 per cent or more stake in all companies operating in the country, had created concern among foreign investors
The report states that despite uncertainty over the election results, most Government policy was expected to continue as “public pressure to promote job creation ensures that economic policies stay largely pragmatic”.
It says Zambia was not expected to face any external threats in 2011 up to next year, adding that donors would continue to provide budget support.
The report states that there could only be suspensions of aid if evidence of corruption and mismanagement emerged.
“Zambia is expected to remain on good terms with other countries in the region, underpinned in part by its membership of two regional trade blocs, the Southern African Development Community and the Common Market for Eastern and Southern Africa,” the report states in part.
ZNBC
Labels: ECONOMIST INTELLIGENCE UNIT, PF, WYNTER KABIMBA
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Attacks on Catholics could cost MMD - EIU
By George Chellah
Mon 04 July 2011, 03:59 CAT
THE Economist Intelligence Unit (EIU) has revealed that state-owned media's campaign against the Catholic Church could dent support for the MMD among Zambia's three million Catholics. And the EIU has maintained that the forthcoming elections could lead to a transfer of power from President Rupiah Banda to Michael Sata.
This is contained in the latest EIU country report on Zambia for June 2011.
“The Catholic Church in Zambia has condemned the state-owned media's campaign against it.
This could dent support for the MMD among Zambia's three million Catholics,” the EIU stated. “This is likely to be at least partly offset by the unprecedented support that the MMD has reportedly received from traditional leaders in Southern Province”.
The EIU stated that President Banda and the MMD would remain in power until the presidential and parliamentary elections due this year.
“The MMD will benefit from the advantages of incumbency and remains likely to win, but the elections will be closely contested and could lead to a transfer of power to the Patriotic Front and its leader Michael Sata,” the report stated.
The report further stated that whichever party wins, the government is likely to stick to a pro-market agenda and promote macroeconomic stability, as strong public pressure to promote job creation ensures a high degree of economic pragmatism.
“Real GDP growth is forecast at 7 per cent in 2011 and 7.2 per cent in 2012, underpinned by subsidies for producers of maize, investments in mining, fiscal incentives for investors in the 'priority sectors' and a sharp rise in public investment,” it stated.
“The kwacha will be supported by large FDI inflows and strong copper output, but is nevertheless forecast to weaken marginally to ZK 4,869:US$1 in 2011 and to ZK5,111: US$1 in 2012 as the surge in copper prices peters out.
“The current account is forecast at a surplus of 2 per cent of GDP in 2011 and a deficit of 3.7 per cent of GDP in 2012 as export growth slows in line with copper prices and strong foreign and public investment boost imports of capital goods.”
The EIU stated that the next five months would be dominated by the elections that are scheduled for October 2011.
“Political squabbling will intensify but stability will remain intact. Following months of discord, the alliance between the two largest opposition parties the PF and the UPND has ended.
Despite this, the elections are likely to be closely contested and could result in a transfer of power from the president, Rupiah Banda, and the ruling Movement for Multiparty Democracy (MMD) to the PF and its leader, Michael Sata,” the report stated.
“Mr Sata's nationalist rhetoric has raised some concern in the past, but he would be highly unlikely to depart radically from the MMD's fairly pragmatic policy agenda. Following the elections the government's focus is likely to revert to policy.
A referendum is expected in 2012 on changing presidential elections from the first-past-the-post system to one in which the winning candidate would require more than 50 per cent of the vote.”
The EIU stated that the population is widely expected to approve the change.
“Labour unrest and demands for higher wages have increased in the run-up to the elections. Stability is likely to be maintained as the government intervenes to quell any unrest, although underlying discontent will persist,” stated the report.
It stated that the presidential and parliamentary elections are likely to be closely contested.
Labels: CATHOLIC CHURCH, ECONOMIST INTELLIGENCE UNIT
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Economist Intelligence Unit predicts change of govt
By George Chellah
Tue 31 May 2011, 04:10 CAT
THE Economist Intelligence Unit (EIU) has revealed that the forthcoming general elections could result in a transfer of power from President Rupiah Banda to PF leader Michael Sata. And the EIU states that Sata’s popularity has grown as public discontent with the government has increased.
This is contained in the latest EIU country report on Zambia for May 2011.
On political outlook for 2011-2012, the EIU report has stated that the first half of the forecast period would be dominated by the elections, which are likely to take place in mid- 2011.
“Political squabbling will intensify but stability will remain intact. Following months of discord, the alliance between the two largest opposition parties – the Patriotic Front (PF) and the United Party for National Development (UPND) – has ended,” the EIU stated.
“Despite this, the elections are likely to be closely contested and could result in a transfer of power from the President, Rupiah Banda, and the ruling Movement for Multiparty Democracy (MMD) to the PF and its leader, Michael Sata.”
The EIU stated that Sata’s nationalistic rhetoric has raised some concern in the past but he is highly unlikely to depart radically from the MMD’s fairly pragmatic policy agenda.
“Following the elections the government’s focus is likely to revert to policy. A referendum is expected in 2012 on changing presidential elections from the first-past-the-post system to one in which the winning candidate would require more than 50 per cent of the vote,” reads the report in part.
“A fragmented opposition would then no longer guarantee victory for the ruling party. The population is widely expected to approve the change. Labour unrest and demands for higher wages could increase in the run-up to the elections.
Stability is likely to be maintained as the government intervenes to quell any unrest, although underlying discontent will persist.”
On election watch, the EIU maintained that the presidential and parliamentary elections were likely to be closely contested.
“The MMD will benefit from the advantages of incumbency and its formidable electoral machinery. However, the PF and Mr Sata should put up a strong challenge to the MMD,” the report stated. “Mr Sata narrowly lost the 2008 election and his popularity has grown as public discontent with the government has increased.
“A controversial reversal of his position on mining taxes – Mr Sata previously advocated higher mining taxes, but now supports a stable tax regime – has not dented his popularity.”
The report stated that the electorate is disillusioned with the MMD but is also disenchanted with the opposition’s enduring failure to offer a united front against it.
The EUI stated that the run-up to voting would be marred by bias in the state-owned media and the incumbent’s use of public resources to fund their campaigns.
“Some election-related violence could occur, especially if the government sticks by its decision to ban parallel vote tabulation whereby polling booths are monitored to ensure that the results announced at individual polling stations are consistent with the nationwide result, which would entrench the opposition’s suspicions of electoral fraud,” stated the latest EIU report in part.
Labels: 2011 ELECTIONS, ECONOMIST INTELLIGENCE UNIT
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Zim to perform better than Iceland in 2009: report
Our reporter
Wed, 07 Jan 2009 00:53:00 +0000
THE Republic of Iceland is forecast to be the worst performing economy in 2009 lower than sanctions-hit Zimbabwe, according to a survey by The Economist Intelligence Unit, a sister organisation to The Economist magazine.
According to the survey, the country will see growth shrink by nearly 10% following the spectacular collapse of its banks in the past few months during the global financial crisis.
The EIU predicts that among the 10 worst performing economies will be Britain and Ireland.
Zimbabwe is the only economy under sanctions to be included in the list; but is still predicted to perform better than Iceland in 2009.
The US introduced economic sanctions on Zimbabwe through the Zimbabwe Democracy and Economic Recovery Act (ZIDERA) of 2001. Through this enactment Zimbabwe’s access to finance and credit facilities was effectively incinerated.
US companies are prohibited from doing business with “designated Zimbabwean companies”. These companies include the Minerals Marketing Corporation of Zimbabwe – a key institution in Zimbabwe, among others.
The European Union has also followed suit and currently listed a number of key and strategic companies that were instrumental in bringing foreign currency to Zimbabwe.
Other countries on the EIU list include Singapore, Estonia, Taiwan, Venezuela, Ukraine, and Latvia.
“Countries with free-falling currencies, burst housing bubbles and a heavy reliance on finance and trade will also suffer,” according to EIU.
“Qatar will grow by over 13%, and many sub-Saharan African countries will also perform strongly. China is still in the top ten but will grow at a considerably more sedate pace than in recent years. Global growth is set to be a feeble 0.9%.”
Sub-Saharan African countries are set to perform much better than Western countries, in comparative terms for the first time. Malawi, Angola, and Tanzania are predicted to outperform the US, Germany, Britain, France, etc.
Qatar and China are in the top 10 performing economies for that period.
Labels: COLOUR REVOLUTIONS, ECONOMIST INTELLIGENCE UNIT, GDP, NEOLIBERALISM, SANCTIONS, ZIMBABWE
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