Government has re-affirmed its commitment to stabilize the country’s fiscal environment to enable the financial markets provide impetus for growth.
Ministry of Finance and National Planning Permanent Secretary for Budget and Economic Affairs Mukuli Chikuba said government is focusing on growing the economy through key sectors in order to increase Foreign Direct Investment into the Country.
Speaking when he featured the Quarterly economic review discussion hosted by the Zambia National Commercial Bank, Mr. Chikuba said the Country’s economy is projected to grow by 3 to 4 percent in the medium term and that this should improve as Foreign Direct Investment continues to come into the Country.
“Part of the policy trajectory or the components that make up the policy trajectory from where we are going forward is in the first year to attain macro-economic stability and stabilize the fiscal environment so that in the medium to long term the financial markets can provide the needed impetuous for growth.
“We are stabilizing the economy because we want investments to come in and improve further our macroeconomic projection going forward. We expect the economy to grow by 3-4 percent in the medium term, “ he said.
FDI is coming back into the country will further these projections.
The Permanent Secretary pointed out that what has happened in the mining sector with First Quantum Ltd announcing its investment of $1.5 billion is as
a result of the stability that government has established.
Mr. Chikuba emphatically stated that for this sector to grow, there was need for FDI to come in.
And speaking during the same discussion, Bank of Zambia Head of Economics Jonathan Chipili said the positive shifts in the micro- economic environment of the country, the cost of borrowing is expected to be lowered.
Mr Chipili expressed optimism that this will trigger a positive impact on economic growth.
“With the shift in the macro-economic environment, borrowing costs should begin to come down. Despite remaining sticky, there is a bit of curvature in lending rates, pointing downwards.
“ With this, borrowers should begin to see the benefits, ” he said
Meanwhile, ZANACO Head Economic Research Patrick Chileshe said the Kwacha’s strong performance is keeping prices of imported consumer goods stable.
Mr Chileshe said that the trend is at the same time muting production costs adding that positivity in the economy is helping to counter capital flight risk from rising external interest rates.
“The exchange rate is the most important factor in Zambia’s inflation dynamics. Zambia’s consumer basket is heavily tilted towards imported consumer items, which are usually priced in US Dollar so when the currency is appreciating, the direct effects are that the kwacha price of imported items start going down, although sometimes there is inertia by traders who maintain the same prices,” he said.
The quarterly economic review discussion panelists consisted of Ministry of Finance Permanent Secretary in charge of Budget and Economic Affairs, Mukuli Chikuba, Bank of Zambia ( BOZ ) Head of Economics Dr. Jonathan Chipili, ZANACO Chief Risk Officer Mutisunge Zulu and ZANACO Head Economic Research, Dr Patrick Chileshe.
This is according to a press statement released by ZANACO Head Communications Verona Nkolola.