Bank of Zambia
Bank of Zambia

Central Bank Governor Denny Kalyalya told a media briefing yesterday that the second quarter of 2019, real GDP grew by 2.3%, down from 3.9% during the corresponding period in 2018.

“Contraction in mining output, construction as well as transport and storage accounts for the slowdown in real GDP growth,” he said.

Dr Kalyalya said economic activity is projected to remain subdued and the recovery is weak.

“In 2019, GDP is projected to significantly decline to about 2.0% from 4.0% in 2018 premised on projected contraction in agriculture, constrained electricity generation, and lower than anticipated mining output. This calls for concerted efforts by all economic agents to put back on an upward and strong growth path,” he said.

Zambia has $3 billion of Eurobonds outstanding. Its ratio of debt to gross domestic product(GDP) will rise to 92% by the end of 2019, triple the figure from 2015, according to the International Monetary Fund.

The situation is exacerbated by the government’s struggle to rein in spending and a severe drought, which is hammering agricultural output and hydropower generation.

The Bank of Zambia has decided to revise upwards the Monetary Policy Rate by 125 basis points to 11.50%. The decision was arrived at by the Monetary Policy Committee at its Meeting held on November 18 -19, 2019.

Dr Kalyalya said inflation is projected to remain above the upper bound of the 6-8% target range over the entire forecast 2019 to third quarter of 2021 due to heightened upside risks.

He said the decision to raise the Policy Rate is intended to counter inflationary pressures and bring inflation back to the target range in the medium term and hence support overall macroeconomic stability.

Dr Kalyalya added, “the MPC was mindful of the marked deceleration in growth and risks to financial stability. In this regard, the MPC recognised the importance and need for other tools that include macro prudential and fiscal policy measures to address these risks.”

He stated, “Furthermore, and as indicated in previous MPC Statements, monetary policy alone is not sufficient to address prevailing economic challenges and to restore macroeconomic stability. It must be complemented by corrective fiscal and structural policy measures.”

“In October, overall inflation rose to 10.7% as food inflation increased to 13.3% while non-food inflation slowed down to 7.8%,” Dr Kalyalya said.
“On account of heightened upside risks, inflation is projected to remain above the upper bound of the 6-8% target range over the entire forecast horizon (Q4 2019 – Q3 2021.”

He stated that the risks, which manifest through the expectations and exchange rate channels, include persistent high food prices, electricity shortages leading to extended load shedding, slower than anticipated progress on fiscal consolidation and high external debt service payments.

Dr Kalyalya said decisions on the Policy Rate will continue to be guided by inflation forecasts and outcomes, identified risks, and progress in the execution fiscal consolidation measures.

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37 COMMENTS

  1. As long as the monetary policy of the country falls under politicians (BOZ reports to the Minister of Finance) who control the fiscal policy, nothing tangible will be achieved. At least during RB and LPM we had some politicians who could reason and take professional advise seriously, this drunk from Kuku with the likes of Kaizer Zulu, Freedom Sikazwe, Bowman Lusambo, Kampyongo, Chitotela etc cannot take the country anywhere.

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    • @Ba Nsimbi good point. It’s very sad when you have people like Dr.Kalyalya who understand the economic challenges we are having but has no power to suggestions because of people in charge like you have mention those thugs who have no knowledge on how to govern. I wonder what it would take for the fellow zambian to wake up and do the right thing. Like Mr Sata (MHSRIP) used to say the most educated citizens in zambia are cowards because they are scared to talk, they would rather keep tondolo, while these Thugs are Plundering the nation.

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    • Uko!

      By next year the GDP will be 0%, then 2021 – 100%. The violent & visionless PF bandits have lamently failed. Now it’s $1=K15.

      How much is mealie meal today?

      When is bandit Kaizer going to be arrested by PFolice?

      Dununa Load shedding is now normal thing under this visionless & violent PF bandits.

      The Skeleton Key
      ~206~

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    • More money in Lungu’s and Chitotela’s pockets.

      Is there anything positive that this government has done so far?

      Anything?

      Meanwhile Kaiza Zulu continues to be a menace.

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    • GDP down (Does Edgar even know what is GDP?) load shedding massive, Kwacha naipena, unemployment massive, hunger and disease massive, and you have f00ls parroting sole candidate for a visionless Eddy…..Zambians!!

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    • When Anonymous calls them PF Bandits…people think its a joke now there you have it….Lungu said he had no vision so why is everyone surprised…Lungu should just resign on moral grounds because what he is doing to the country is unacceptable…2021 this chief bandit Lungu should be sent to Jail so that other leaders can learn something

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    • “If a TONGA were President, Zambia’s GDP would be like Germany!” UPND INCOMPOS Group 4. If HH had been the player and Captain in the game Zambia lost 5-0 to Algeria last week, HH could have scores at least 6 goals and Zambia would have won 10-5,” HaGaY Jay and BOSPAKATA Joint Communique.

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    • This is not surprising to say the least. The majority of voters don’t understand the ramifications of this decline but they will understand once they can no longer afford a ka pamela. And that will be the demise of PF. The governing party will certainly not survive 2021, lest they rig the elections again. But I get the sense that Zambian will reunite to boot them out this time. A hungry man is a very angry man.

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  2. For once may the government be serious in their implementation of corrective measures to put Zambia on the right trajectory to recover and stick to it. Stop chasing and hindering the opposition all the time where you seem to spend money to inhibit them. Focus on improving the economy that is how you shut your critics otherwise if you have failed do the people a favor by stepping aside and allow others equal to the task to take the reins.

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    • Did it ever occur to you that this government simply does not know how to run the country?

      Stealing, yes, that they will continue to do.

      There are leaders that want to improve the lives of their citizens, like Kagame.

      And there are leaders that want to improve their own bank balance via stealing, and causing misery to citizens, like Lungu.

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  3. The country is in coma.Lets try a new team as this team cannot take
    Us anywhere.They have runout of
    Ideas .Everything is at standstill. A
    Country without power is as good
    Dead.

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  4. These are lies and they know it, how can economy grow when we have been experiencing up to 15 hours of load shedding.

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  5. Again……this ain’t news.

    It’s like letting some of us know that vegetation sprouts with rains…..

    Of course everything will breakdown with this inept president……some of us who know fully expect this and worse to come.

    I remember just when lungu assumed the presidency , by fluke may I add……..he was asked about a certain under performing ministry…..

    Lungu shockingly and point blank said that is not his job and to the effect that that has nothing to do with him…… !!#@!$#@ …..

    Those of you who expect any better from lungu are very, very , very naive and du.ll.

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  6. Any surprises here? Successive governments have just added to the malaise in different measure. What is unfortunate is that this has been a kakistocracy that I hope will not repeat in the history of governance of this country.

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  7. When the administration is outside the country. (Zambia)Will read that they are meeting with their counterparts and signing memorandum of understanding. Is this the yield:”an amount”( Zambia’s 2019 GDP significantly declines to 2% from 4% )We get out of all that signings and meeting counterparts. The word
    administration comes with great countability.

    Please scrap the amendment bill number 10 to the constitution of GRZ.

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  8. Dununa reverse in all sectors…and some buffoon will be busy saying we have a hard working government. Limbi Hong Kong formula is needed to push things into front gear!

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  9. Still, changing leadership at political level won’t solve all our problems. Mining output is mainly due to issues like KCM and subdued international commodity prices which remain low. Power generation is because of lack of investment in power generation mainly by MMD govt. Under PF, we’ve seen Itezhi tezhi, Maamba and soon to be commissioned Kafue Lower come on board, with Batoka and other plants in the pipeline. We are going through trying times like most countries in the region. Change of leadership is not the answer.

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    • You need to quit with the blaming. Your incompetent party is the one in charge. Instead of just identifying problems also identify solutions and if you can’t (which everyone knows you can’t considering the collection of dull !d!ots in this party) then just sit down and wait for people with brains to take over in 2021 chapwa. Passing blame is a sign of being utter failures. Mwaumfwako insoni bane.

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    • Accepting mediocrity is now the norm in Zambia which is very sad. With the levels of borrowing by the PF we expected our economy to be better by now and not this blame shifting. If you marry a woman or get married to a man with a child or children from a previous marriage it means you are up to the challenge and must assume responsibility are you going to say later on the reason these children failed it’s because they are not mine? No mudala because if they do well, you will be the one getting credit for that too

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    • These are the type of people we must cage. Because of their stu*dity they encourage politians to carry on doing the wrong things and eventually we all have to suffer because of f**ls like these. He doesn’t understand that because of people like him, even his family is sitting in the dark.

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  10. I have always thought highly of our President. He is indeed humble and a good leader. It is just that he was surrounded by the wrong people. I see him going the RB way.

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    • LT, how can GDP grow by 2.3%, down from 3.9%, over the same period in 2018?
      If GDP grew BY 2.3%, then what is the GDP now? Please let someone who understands economic and finance jargon do the reporting on these issues. Never use incompetent grade 12s to report on such sensitive matters.

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  11. The Global economy is stuck below 3% .It will require more from GRZ to address and change that ,more policy forecast in attracting investments and not simply hoping for the cyclical upswing The policy misconception is to wait for the global economy to upswing above 3% to 10% and flexing the same usual same monetary and fiscal policy which are structure Growth will be stuck in 2.1% to 3.5% If you can beat that then you will differentiate

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  12. Ladies and gentlemen this is your captain ECL. We will be landing but in reverse. The plane will tough down at 2021 on condition that:
    GDP will reverse from 7% to 2%, inflation will marginally reverse from 6% to 12%, this goes with milli meal from K35 to K150, not bad for a pilot. You must also be assured that peace will slightly reduce as cadres and Kaizer will cause terror. Notable during reverse landing will be sharing forest 27 among the elites, mysterious 48 houses, wheel barrows will also cost $1m dollar each. Other signs will be massive parte after parte to be supported by proceed from Mwibala.
    Note: During reverse landing you captain will be very high on jemason and his advisers will be in charge. You will continue to see Mr Find lay at every government functions.
    Tighten…

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  13. When Chiluba wanted to go for third term, his own ministers led the way to block him and the citizenry rallied behind. In order to free ourselves, we need something similar or completely the same action because judging by Kaiser Zulu’s actions, these guys are not prepared to go without a fight.

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  14. Forex reserves are at their lowest in the history of this country. Another record. No wonder the dollar has gone to K15. Mines output has drastically dropped. This is how milingo lungu is running the mines. What wrong did we do to deserve this.

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  15. Ya kosa bola pa Zed, politicians are getting too deep in people’s pockets with no sign of slowing down. Pray bane, pray for better fortunes pa sogolo, not dununa reverse.

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