The International Monetary Fund (IMF) has said that Zambia’s economic prospects for 2011 are favorable and that Growth is projected to remain strong at 6.6 percent.
This is after an IMF mission recently visited Zambia to continue discussions for the fifth review under the Extended Credit Facility (ECF) from October 28th – November 3rd.
Twice before in 2010, the IMF mission has visited Zambia with the first visit that took place from February 17th – March 2nd while the second one was from September 2nd – September 15th.
The IMF’s Executive Board is expected to consider the completion of the 5th review of Zambia’s Extended Credit Facility (ECF) next month in mid December.
While in Zambia, the Mission met with the Minister of Finance and National Planning, Dr. Situmbeko Musokotwane, the Governor of the Bank of Zambia, Dr. Caleb Fundanga and other senior officials.
According to a statement released by the IMF today, the Mission Chief for Zambia, Mr. George Tsibouris said Zambia’s economy had been boosted by a record maize harvest, a rebound in tourism and a continued increase in copper and construction output.
Mr. Tsibouris said this year’s bumper harvest had helped bring down Zambia’s inflation target of 8 percent and that the Bank of Zambia was targeting a further reduction in inflation to 7 percent by the end of 2011.
He further stated that Zambia’s International reserves had strengthened and now stood at US$1.9 billion.
“The government is to be commended for its handling of economic policy so far in 2010. Fiscal performance in 2010 has been broadly in line with expectations, though there has been the need to finance the purchase of the maize surplus,” he added.
Mr. Tsibouris also commended the Bank of Zambia for managing monetary policy well with a view to reducing inflation, while at the same time maintaining conditions to facilitate economic growth.
The IMF also said the 2011 budget is consistent with the maintenance of sound macroeconomic policies.
The Staff Mission stated that the envisaged revenue enhancement in the 2011 budget is appropriately ambitious and stems from new tax policy measures, administrative improvements and payments of tax arrears.
It said the expenditure mix shifts clearly towards capital and social spending, though there is some residual upward pressure on wages despite tight limits on new hiring.
With a projected reduction in external budget support, an increased proportion of infrastructure spending, particularly in the electricity and road sectors was to be financed nonconcessionally, consistent with preserving debt sustainability.
This is contained in a press statement issued by First Secretary (Press) at the Zambian Embassy In Washington DC, Ben Kangwa.