Zambia has this year accumulated an unprecedented US$1.1 billion in international reserves, the highest ever such figure in the country’s history.
The reserves have risen from US$706 million in 2006.
Bank of Zambia (BoZ) governor, Caleb Fundanga, announced at the bank’s end of year media briefing in Lusaka yesterday that Zambia’s balance of payment (BOP) support had significantly dropped to US$204.9 million from US$783.0 million in 2006.
“Zambia has continued to record favourable external sector performance resulting in an accumulation of gross international reserves to US$1.1 billion in December 2007 from US$706 million at the end of December 2006,” Dr Fundanga said. “This is the highest the country has ever accumulated.”
Trade surplus in 2007 narrowed to US$589.4 million from US$1,041.3 million mainly as a result of a sharp rise in merchandise imports, which outweighed the increase in exports.
Merchandise imports increased by about 36.1 per cent to around US$3,641.5 million during the course of this year following an upswing in imports of goods such as iron and steel, industrial boilers and equipment, including petroleum products.
Other imports were electrical equipment, motor vehicles, plastic and rubber products.
“I should emphasise here that this is a good reflection because most of these have not yet been put in production. Once they are, there will be increased production,” he said.
He said the country’s total export earnings increased by about 12 per cent to US$3,933.4 million. This reflected both higher metal and non-traditional exports.
Metal export earnings rose by nine per cent to US$3,091.8 million. The earnings were mainly from higher copper and cobalt exports. Copper exports increased by about six per cent to US$2,868.3 million. This was as a result of high copper prices on the international market.
Cobalt earnings went up by 68.8 per cent to US$223.5 million largely due to higher prices.
Dr Fundanga also said in 2007, commercial banks’ lending rates continued to go down, falling to 24.3 per cent in November from 27.9 per cent in December 2006.
The average savings rate for amounts above K100,000 and 30-day deposit rate fell to 4.8 per cent and 4.9 per cent from 6.1 per cent and 8.4 per cent, respectively.
The Kwacha strengthened against major currencies in 2007 on account of the steady supply of foreign exchange that arose from improved external sector performance coupled with strong macro-economic fundamentals.
There was also an increase in domestic credits due to the 45.6 per cent expansion in private sector credit although Government borrowing declined by 35.8 per cent.
He said on a sectoral basis, the agricultural sector continued to dominate the distribution of credit and accounted for 21.4 per cent in November 2007.
And Dr Fundanga said the central bank had continued to implement its “clean note policy” and had, by November 2007, withdrawn a total of K455.9 billion (64.3 million pieces) of unfit paper and polymer bank notes from circulation.
Mutilated polymer bank notes that were withdrawn from circulation accounted for 19.8 million pieces valued at K15.3 billion.
“However, there is still a prevalence of unfit bank notes in circulation. In this regard, we continue to urge the public to exchange all unfit notes for fit ones either through the Bank of Zambia or any commercial bank,” Dr Fundanga said.
He said customers had the right to exchange mutilated notes with new ones at any commercial bank where they could also request for either high or low value bank notes.
Daily-Mail
Finally you have said something sensible! Yes one digit inflation is meaningless without Jobs creation. You have my support. When I critism you I not after you but that you can perform and Zambia in eradication of poverty.
I didn’t know we had a reserve somewhere. I certainly knew something like this existed during Kaunda, which of course he inherited from the colonial masters, but brew it up in the liberalization of other countries leaving Zambia very very poor. Well done Levy, Magande and Caleb.
If this was under any other President, we would not have heard one word about this reserve! We will wait and see what the next President brings. We already know about the previous regime.
This is good news for once. However, I am concerned about the lending rates by commercial banks which have remained static at 24.3% since April 2007, while inflation has dropped by 3.5 percentage points from 12.4% in April to 8.9% in December 2007. Even the base rate and lending margins have remained static at 18.1% and 6.1%, respectively. Fundanga also reduced their statutory reserve ratios, thus increasing their cash reserves, but they still want to lend us at exorbitant rates! Fraudsters!
*base rate: 18.2%
Remove Mangande of your list Ba Daddy, he has not dont his part with mines minister. If Zambia was serious it could more reserves even 5 years. We have copper whenever I think of this I get annoyed because almost that moves has a copper element. Most houses have a copper cable. Think of you phone its either from steel or cobalt. Most bridges in the world has steel from our industries. Why cant we revamp poverty by using what God gave us. Explotation is gone its time to benefit. When the mines—
ctd.. were used to develop SA and Zimbabwe, not mention the west which has consumed our resources for 500 years with any pay. It hates and pains.
#7, you seem like a history teacher indeed. 500 yrs my foot, dont know where those facts come from dear easy!
Analyst
interest rates has nothing to do with inflation but money supply and services and commodities. The BOZ regulates the money supply. Fundanga has to see what he can do with M1, M2 and M3. Once money adds value see the current becoming strong.
Muntuza, Iam not history teacher but though mining in Zambia started in 1920 at a large scale in the past you didnot to dig to get Gold, copper, or another mineral. Just think of the industrial revolution when did it happen? The infras of explorer and missionaries. You can to 500 years a century has 100 years so pilz Muntua calculate
Among other considerations, interest rates are set based on what the inflation rate might be in the coming year or so, to me that is a relationship right there. For example, when the ONS-UK reported an inflation rate of 2.1% for November 2007 in the UK, this cheered economists who expected interest rates to be cut starting February next year.
Analyst, inflation is high influenced by consume under the law of supply and demand. i.e when too much money fetch few goods money loses it value that you need sacks just to buy an orange the case of Zimbabwe. On the hand you can have deflation if many goods and services are avaluable on the market. This is the most worst situation because people die of anxiety. What is important is to have a stable money flow. Zambia has not achieved this at no time, you take the hiking of ZESCO tarrif. T
OK Easy, take it easy. My other area of interest is unemployment. With 3.6 million Zambians in the informal sector, what can we as country do to formalise this huge informal economy, which hardly contributes to taxes. Easy?
#13 Analyst I wont tell my approach because this is public forum. The reason is simple in the past I have mentioned issues like feasibilty studies before implementing anything, and someone was there the next day telling the nation about this without really knowing how to go about it. I have a soltuion to the Zambian economy. Believe I will deliver. What I can advise GRZ now is concentrate on transport and communication, energy. The Problem of unemployment in Zambia will increase in the next …
5 years because half of the population is right now under 15 of age. In 2 years time I will start implementing my strategy and you will see the results. All what can tell you as Zambians we should not crowding and sparely already one big problem can be solved. Thereafter we can move on.
Good #12&13,It scares me to think that all that attracts bloggers on LT are issues about tired politicans and soccer. Business or enomically inclined topics in most instances receive no comments at all. High inflation and unemployment are real killers of development. Unemployment, by the way, also includes level of use of natural resources like land, rivers etc and available infrastracture like roads and of course the optic wire when in place. Topics dwelling on these issues need more critique.
Easy, I have respect for Magande. Point to me at least one Finance Minister who has been a performer. Zambia has been drawn into serious poverty because all we had were SERVE YOURSELF FIRST MINISTERS. Nawakwi was there who even promised us a National airline. Where is it? Ronald Penza Katele, ect only talked about BENCH MARKS, (sorry I don’t understand this word even now)where are the BENCH MARKS? Well probably ZAMTROP. Viva MAGANDE
Ba Daddy, at the begining of 2007, we set out to achieve 7% economic growth, reduce inflation to 5% (later revised to 9%), reduced Govt domestic debt to 1.2% of GDP, increase international reserves to 2.5 months of imports. Those are benchmarks right there. The question is “Did we achieve these objectives?”. I know we achieved the inflation target. I don’t know what $1.1 billion translates to in terms of months of import cover. I first need to read Governor’s full speech on the Bank’s website.
Zambia’s recovery has been slow but sure and this announcement shows that LPM and his gang have been committed to leaving Zambia a better place.Alot more could have been done and some sectors of the economy have reason to complain but we cannot fault GRZ under LPM for at least trying.In time all of this will translate into poverty reduction,infrastructural improvements etc etc, for so long as we safeguard the principles of democracy!!