The Bank of Zambia, BOZ has projected an end of year annual inflation of below 8%. BOZ Governor Dr. Caleb Fundanga told a media briefing in Lusaka yesterday that this favourable outlook is on account of expected stability in maize prices in view of the bumper harvest in 2010.
Dr. Fundanga explained that the bumper harvest will soon compel prices of stock feeds and other maize products to significantly drop in prices. He said with the bumper harvest, stock feed prices which will translate into reduced prices of chicken, meat and cornflakes.
He further explains that favorable supply of vegetables and fresh fish during the period and relative stability of the Kwacha against the US Dollar for much of the fourth quarter will help keep the inflation rate relatively low.
Dr. Fundanga added that the central bank will continue to monitor developments and undertake appropriate monetary policy actions to ensure that monetary targets are achieved.
He explained that to contain growth of money supply within the operations of the programmed path, BOZ will continue to employ open market operations and auctioning of government securities.
And Dr. Fundanga has expressed satisfaction at the overall financial performance of the banking sector in the third quarter of 2010. Speaking at the quarterly media briefing in Lusaka yesterday, Fundanga revealed that on aggregate, the banking sector was adequately capitalized and that the liquidity levels have remained high.
He further disclosed that the overall balance of payments recorded a surplus of US$357.6 million during the third quarter compared to a deficit of US$94.3 million in the previous quarter.
He said the current account surplus increased to US$453.6 million from a surplus of US$92.8 million recorded in the last quarter. The BOZ governor also revealed that the slow pace of economic recovery in the United States has in the third quarter drove the US Dollar weaker thereby enabling the Kwacha to post a 5.0% gain against the American currency.
He further said a sustained rise in the copper prices at the London Metal exchange to an average of US7, 281 per tonne gave further support to the Kwacha with the Interbank rate ending the period at an average of K4, 869 per US Dollar.
QFM
BOZ would have us believe their deft management brings about the current climate.Many of the forces beyond the control of BOZ like higher copper prices & a weaker dollar have contributed the most.Crude oil is creeping higher and might dent your inflation targets with higher petrol prices soon.
Zambia can attain an inflation rate as low as 1%,but as long as my grandma in Chadiza and my borthers and sisters in western province continue wallowing in poverty,it wont mean anything, Zimbabwe had an inflation rate of 5 billion % early last year,was zambia any better than zimbabwe
Answer to #: No, Zambia was not any better!
Useless figures and statistics which do not translate into any meaningful improvement of life for people at grassroot. Fockoff BOZ!
#2 Typical PF Kaponya cadre mentality? I think if you have a certificate of attendance from the Matero University School of economics or Kulima Tower School of Insults, it is advisable to stay away from economics topics and leave it to those that understand them and understand their significance. Stick to RB or Hon Shikapwashya insulting threads because that is what most of you majored in at Kulima Tower. Having said that, let me break it down for you.
What we are talking about here is economic development and not money laundering. Economic development is a process and not an Event. Health leaving is a process and not an Event. If you are Christian, Holiness is a process and not and Event.
Two key characteristic of any process are Indicators and Outcomes..To be Continued
continued.. The Outcome is what must match your goal. The Indicators is what is helps you measure how far away or whether you are moving in the right direction towards your goal or not.
The goal is to eliminate poverty for your grandma in Chadiza. So the outcome after a good process will be that your grandma will be free from poverty. The process is not an event or a 90 days economic miracle that has failed to clean garbage in Lusaka for years. Inflation, Trade surplus, these are indicators showing us that we are on the right track and they also help us measure our progress and as long as we continue doing what we are doing and quicken it, we shall get to our outcome.
This is what this story is about. Every quarter the BOZ Governor tell us how we are doing. …to be continued
BOZ is right to forecast inflation to levels below 8% by the end of the year. Even with increased urban pump prices, we still achieved an inflation rate of about 7% last month. This shows that inflation can be contained within a certain range.
People must not be cheated that containing inflation is not important. Zimbabwe had inflation rates so high that at one time they would call it the hour economy where prices would go up every hour.
Inflation creeps up on the poor like a bad plague hence it should be contained to levels where it does not harm the poor and also does not harm business activity.
Please do not buy into the rubbish people who may not understand (or pretend not to understand) economics feed you about inflation.
continued.. the numbers tell us if we are on track or not. And taking the fitness metaphor, health is not an event. You need to start exercising and from time to time you need to measure your weight and BP and all other indicators to see how you are doing and if you stick to your plan you will eventually arrive at your destination. And the Same applies for Holiness. You don’t become holy just because you have become born again, you need to do things and measure your progress through things like fruits of the holy spirit and fruits take time to grow.
So please don’t just deride and condemn when the BOZ releases these numbers. It is just to show us how much progress we are making. I hope this educates you. Free education for you right there from MMD
@ #4 MMD Chief Bootlicker
Please forgive them. They have been lied to by SATA-PF/Mmembe/Genocide-Bwalya that inflation is not important. These people have cheated them because Mr. Sata promised them “more money in your pockets”. This way, Mr. Sata can run to the printing press to print as much money as possible and they’ll be unable to see that this has a huge bearing on inflation.
Mr. Sata has also caused them to believe investors and private sector development is a problem and unnecessary so when the effects of inflation (due to printing press) creep into the economy, Mr. Sata can blame it on “unscrupulous businesses” and foreign investors.
Some people are so gullible that they are buying into this. It’s a shame really.
#4 Mudala you are dangerously ignorant
Economic development is a process not an event
Health living is a process not an event
***what school of thought is this***
Quote “Characteristic of any process are Indicators and Outcomes” in this case an indicator is 8% inflation rate and still going down, what then is the outcome? duh
No. 4 and 5. Please spare us of your economics lessons. Kaponyas are also Zambian human beings who should have a say on how things are being managed in our country which belongs to us all regardless of our levels of education. I have lived and worked in some of the most rural areas in Zambia and can tell you of extremely high levels of poverty, poor health, poor education in these areas were people would stone you to death if you explianed your meaningless economics to them. Where does the BOZ Governer think we are going to get fresh fish when the annual three month fish ban starts on the 1st December.
In United States and Japan inflation is almost 0% today. They also have high unemployement, can someone explain this scenario. Low inflation in my view only means more Zambians can not afford the basic neccesities of life, thus the prices are artificially stable. I would like to see the Bank of Zambia begin to focus on unemployment statistics.
# 4 and 5, I am still waiting for you to disclose your number so that I can meet you and rate you. If you are a great man-I will swallow pride and update the bloggers here so that we can give you the respect you deserve and if you are a zombie as you sound, again I will update the bloggers so that even us who ignore your lunacy can now forget about you. Please dont expose your economic ignorance every day. True statistics are a measure but not figure issued by RB given to Fundanga to annonce as a parrot. The inflation rate and GDP is NOT increasing but reducing-No text book see the suffering of the people. Like Panje has correctly said, dont listern to people from far who do there survey at Manda hill, go to Shangombo etc and do your survey their.
# 9 and 10#. if you cant debate intellectually better keep quiet than distructing the valuable and positive awareness campaign that Mr. Capitalist and Chief bootlicker at propagating for free. These figure Boz is giving us are indicators telling us where we are and where we are going. They are not themselves the ends. Good examples have been given to you. If you want to be healthy u must exercise, and for you to know that you are doing the right exercises you must measure your weight, look yourself in the mirror, take your BP and improve where there is need. These activities are however not the objectives themselves but the measurands towards the objective of becoming healthy. As someone has already said its not an event but a process.People wont have money in their pockets overnight.
No.13. Shut up you foolish *****.Why should people in Shangombo, Nabwalya or the Bangweulu swamps exercise and look themselves in the mirror? I am not an economist but an ordinary citizen with something to say and have every right to do so.
#13
Quote “These activities are however not the objectives themselves but the measurands towards the objective of becoming healthy”
what is the objective of doing excersize then/going to the gym,,,isnt it to become healthy?
What you MMD zealots need to explain is that there is a difference between Economic Development and Economic Growth, explain this to people not ma rubbish you are parroting here
Capitalist i expect you to propound some of these issues with a level head not just politicking as a cader
Economic Growth which Zambia is currently experiencing is defined as an increase in a country’s ability to produce goods and services. Economic growth merely refers to an increase in the real Gross Domestic Product, or GDP per capita over a period of time.
While economic growth may result in an improvement in the standard of living of a relatively small proportion of the population whilst the majority of the population remains poor. It is how the economic growth is distributed amongst the population that determines the level of development.Taking into consideration the trickle-down theory of economic growth,if the growth in economy is not sufficient to satisfy the needs and wants of the upper sections, nothing or very little shall trickle down to the lower sections of society
Economic Development is a process of improving the quality of all human lives with three equally important aspects. These are:
1. Raising peoples’ living levels, i.e. incomes and consumption, levels of food, medical services, education through relevant growth processes.
2. Creating conditions conducive to the growth of peoples’ self esteem through the establishment of social, political and economic systems and institutions which promote human dignity and respect.
3. Increasing peoples’ freedom to choose by enlarging the range of their choice variables
These are economic facts not ma rubbish yamene mutiuza ayo
Imwe ba @ Smoothcriminal
We need economic growth to sustain economic development. We already tried the economic development (first) model under UNIP and it failed miserably.
Economic growth leads to more income to invest and sustain Economic development. This is why the MMD govt is able to invest in the schools and hospitals they are building. If the economy is not growing, these projects would be unsustainable.
Having read all your contributions up to #17, I’m beginning to wonder whether this is a political platform or what. The subject is very clear. The Governor was just providing an Outlook of the the Economic Indicators. Whether you agree or not to those facts, I can’t understand why names of Parties or people need to be brought into the picture. Besides this is not an arena to just show face even if you got nothing to contribute on the topic. Please lets remain objective stop the nose poking…..
This is just theoretical shit on paper ba governor which has no realistic or practical meaning on the actual ground.And besides keep those sweet and nice terms you are ejaculating to yourself for I don’t understand that financial language which does not make sense to me. We at grass root level, who feels it knows it all.
Very interesting comments from bloggers. Although we are not Economist,we get very interested in economic and developmental issues. Earlier on this blog I did mention that this broad concept of economic development must be well understood before we start praising our politicians. Or else, why should we talk about improved GDP, International Reserves, low inflation all gains which do not tricke down to the ordinary citizen? Look, the country has recorded these gains and yet the UN HDI ranks Zambia one of the countries that has recorded been moving backwards since the 1970s?
Comment #2, Zambia’s inflation has never dropped to 1%, comment 4 laughable and comment 10 there is no such a thing as zero inflation. To the layman, Zambia’s inflation must continue declining until 0% eh! Unfortunately no. There is a tradeoff between inflation and unemployment. In simple terms, as inflation declines, unemployment rises. The decline in inflation must imply low resource use and this triggers unemployment. The desired level of inflation therefore is the point of eqillibrium between ideal inflation and ideal employment. This is usually around 4% or 5% inflation. Dr.Fundanga is wrong to create an impression that inflation must continue declining indeffinately. Good bye bloggers. Am abit busy today.
Some of you bloggers have never even heard of the Phillips Curve.
To all MMD supporters,I can boldly say I feel so sorry for you.The ruling party has been in power for over 20 years now and you can still be excited by this figure?Look around you:infact look at your self!Most of you just like the party you support are not ambitious:yes,you have your degrees but are not ambitious.Its very normal to build a house with stolen money in Chalala and laugh at your friends who have not yet bought or built a house.ThATS WHY DR BULAYA IS IN PRISON,KATELE IS A THIEF,FTJ IS A THIEF AND NON OF YOU RUNS A SINGLE BIG ENTERPRISE IN ZAMBIA.YOU SPEAK VERY GOOD ENGLISH AND YOU ARE GOOD AT TALKING ABOUT GDP BUT YOU DONT CONTROL ANTHING IN THIS COUNTRY.YOU ARE JUST LIKE FLEAS YOU BLOOD SUCKERS!THATS WHY VJ CAN BOAST ABOUT HIS CAREER BUT HAS NOTHING TO SHOW FOR IT!!
Capitalist
You should know better that Economic development and Economic growth are complimentary, you cant have one and do away with the other,this is a third world country we are talking about here
Can you tell me what kind of failed models that were used to come up with the same economic developments that you experienced during KK’s time,what led them to fail,what is it that your MMD is doing now that economists back then couldnt do…you also! how do you let your fellow cader Bootlicker spew that drivel and you go further to glorify him instead of telling him that he is talking crap…Econimics yashani mwajoba kanshi
# 4MMD Chief Bootlicker- We dont want semantics- Here in Zambia, bread price has risen by K1000, Eggs by K200, Chicken by K5,0000, Sugar by K2,0000. So what benefit is this reduction in inflation to us. Oh I nearly forgot mealie meal inspite of MMD Bumper harvest is now averaging between K55,000 to K60,000 and fuel has gone from K5,000 to K7,030. Zeso and Nkana Water and Sewarage have increased their tariffs by 36% and 40% respectively. Meanwhile our pay is stagnant. Tell me if that makes sense to you to boast about figures that wont put enough food on my table.
ba Smoothcriminal
That is the difference between a normative statement and a positive statement. I can believe that everyone should recycle but does everyone really recycle…no. So whether I believe something should be does not exactly mean it is. There are many countries that have had economic growth without development. Brazil was an example of such a country.
Concerning your query about the economic model used, it was having the state as a “super entrepreneur”. The state having control of all resource allocation therefore chocking growth in efficient resource allocation by the private sector. The state becoming a welfare state where close to everything was provided either free or subsidized.
cont…
Concerning Economic development, Zambia has experienced and continues to experience Economic development. One cannot pretend to be blind at the many projects going on in the nation (which even you have acknowledged) in terms of schools, hospitals, road and rail infrastructure to name a few.
The HDI is one of the figures used to measure economic development. From 2000 to 2010, Zambia’s HDI has grown (on average) by 14% so yes Zambia is experiencing economic development as well as Economic growth.
Capitalist hold yo fire,naisa briefly,nakomboka,let nifike kunyumba first,nigule na six pack ya budweiser pa drive through
It must be very strange for people like Smooth Criminal or Deja Vue. It is somewhat ironic because of their political stance, they celebrate when the negative news about Zambia such as the recent UN HDI report and steadfastly refuse to accept any positive news about their mother country such as the article above or the recent report which stated that Zambia was one of the most improved countries in the world when it comes to the ease with which one can start a business.
# 30 Chingolongolo
That is what happens when you blindly read the post and follow Satas rants. I have never heard sata talk about development his MPs are overlooking. That HDI report seems to refere to the decline in living standards in the 70s. This sounds like the elite and white pipos living standards when the wealth was distributed evenly. Like it or not, 2day Zambia has a large middle class. I am witness, no one in Zambia dies of stravation. The masses may not be able to aford a hamberger, but they sure do not starve. We have large welfare projects and GRZ school programes for the vunrable. We have street kids, but if i am not mistaken i saw street kids in the US, in china, in India in Brazil.
Just swallow your hatred for RB and see zambia throu Zambian eyes, you might smile.
From the contributions above,I have seen people talking on behalf of people in Shangombo, Nabwalya, Bangweulu Swamps etc. But these are the same people who have been giving the MMD more votes than the intellectuals in the towns. Maybe we see and interpret things differently. Is it fair for us to think for these people when they are seeing what we do not see?.
It looks like working or watching the inflation rate is almost a fulltime job of BOZ. I’m not economist but I’m sure there must be dozens of other areas they could spend their efforts. For instance, what is the use of the growing reserves (money sitting there) and yet Musokotwane continues to borrow and commit the country more into debt. On the other hand, why not use the reserves to for example provide guarantees for citizens to borrow from local Banks at sustainable rates!
Ba Governor, the Inflation should be controlled by following all the rules in Economics. 1. The money has lost its caracteristics. and we do not need to wait for USA to fail for us to say we have prospered.
#31 You are very correct. The way of measuring inflation is not new. If PF was in power it would be measured in the same way. MMD are not measuring inflation in a manner that they have come up with unilaterally. Those who say a low inflation rate does not matter forget about the recent history in Zimbabwe and where we were in the 80s when prices of foodstuffs kept rising in Zambia. Nowadays when referring to our currency we talk in thousands when in the past if you had K100 you had a lot of money. All this is to do with inflation. The price of mealie meal has gone down and yet people still say that the poor are not benefiting. When anything negative is reported about Zambia, you can literally hear certain people singing and dancing for joy through the computer! What happened to patriotism
:(( for some bloggers.
#33 Vera – Just like the ZP, BoZ has become a cadre of MMD.If you are at home you could have seen how expensive food stuffs and other essentials have become. Bushe ukuchefya inflation nipakanwa fye? It is like eating nshima with the smell of meat and say you have actually eaten meat.
Some of the comments and debates on Economics today are very interesting and since am limited in my knowleadge on Economics i will keep quiet and continue reading with interest especially Economic Growth &/or Development.However one thing is for sure, since these people started boasting about inflation levels, i have not seen an improvement in Zambias poverty levels so why boast???
#16 Red Card Smmoth Criminal, are you an Economist? Your comment at 16 makes a lot of sense, please contnue analysis. I can also go and teach someone at the tavern on Friday instead of just talking about vindule va brown.
No. 32, interesting comment. its true these are the people that vote for MMD because of the cheap handouts of Chitenge, Tujiliji etc. This on the other hand seem to be changing as you can talways fool these people all the time. They may not be very educated with degrees but they are wise and can tell the difference between politicians.
The sad news is that as we discuss the Chinese and many other foreigners are taking over the economy.The MMD has messed us up and dont deserve another chance!If RB with all the failures in the Unip era can rule why not Sata or HH?MMD ni chizungu chabe:look at Mutati,well spoken but busy talking about issues and changes that are only working to the advantage of foreing investors.And all of them are the same,we know Caleb has a job to keep so he can say whatever he likes.I have searched in this country and I have found that we have chosen to be poor and thats what MMD is promoting because even the shoddy deals they are getting into wont take them anywhere:the chaps can steal all the money they want but we know they cant invest in anything big apart from guest houses,a few properties here…
It is pleasing to see more than 40 comments on an economic topic. However, the average knowledge among bloggers rather low. For those who know something or two about economics do not use opportunity to show off. Likewise those who do not appreciate low inflation should open reflect on the events of Zambia in the early 1990’s or any other county that has experienced hyperinflation (i.e. inflation greater than 50% per month).
# 1 & 2 do you understand what inflation means? please explain what inflation has to do with your grandma in Chadiza?
Thanks, this really is the worst factor I’ve read