THE Government has said the economy is expected to grow by 6.6 per cent this year, an upward revision from the earlier projection of five per cent. This has been attributed to the good performance of the various sectors of the economy.

The Government had initially in the 2010-2012 Medium Term Expenditure Framework (MTEF) projected that the economy would grow by five per cent. According to the 2011-2012 Green Paper released by Secretary to the Treasury Likolo

yesterday in Lusaka, the revision of the growth target was on account of better than expected performance in several sectors of the economy during the first half of 2010.

“The agriculture sector recorded the largest maize harvest in history of approximately 2.7 million tones compared with the 1.8 million in the previous season.

“With this bumper harvest, growth in the agriculture sector is now projected at 7.7 per cent, which is 5.7 percentage points higher than the initial forecast,” he said.

Mr Ndalamei said a recovery was expected in the tourism sector following indications that spill-over effects from the 2010 World Cup were better than expected.

He said increased demand for the international travel is expected to contribute to the growth of the sector.

He said copper out put in the first half of 2010 increased by 10.2 per cent to 363,682 tonnes compared to the first half of 2009 when a total of 330,125 tonnes was produced.

He said this was attributable to the resumption of production at the Luanshya Copper Mines as well as an increase in production at several other mining companies.

“With production expected to increase during the third quarter of 2010 total production is now projected at 740,000 metric tonnes, eight per cent higher than the 696, 900 metric tonnes produced when the average price was US$4,034,” he said.

On inflation, Mr Ndalamei said the annual inflation rate declined to 8.4 per cent in July 2010 from the 14 per cent in July 2009.

“Weaker copper prices and the strengthening of the US dollar against the Euro during the first half of 2010 affected the exchange rate of the Kwacha against major currencies. This led to a 8.5 per cent depreciation of the Kwacha against the US dollar from K4,687.89 in December 2009 to K5,122.89 at the end of June 2010,” he said.

The secretary to the treasury said the macroeconomic framework for 2011-2013 will focus on maintaining macroeconomic stability and building on the gains achieved during the last MTEF.

He said the transport and communication sector is also expected to continue expanding with the recent privatisation of Zamtel and the liberalisation of the international gateway and the imminent launch of the 3G services in the country.

“The implementation of economic diversification, policy and structural reforms over the last MTEF period is also expected to unlock further growth over the period,” he said.

On the fiscal policy outlook Mr Ndalamei said government will adopt an expansionary fiscal policy stance in order to accelerate investment in infrastructure and social sectors.

He said the expansionary stance will be within sustainable and acceptable fiscal limits so as to ensure that macroeconomic stability is not threatened.

On the external outlook the secretary to the treasury said although a full global recovery is expected during the current MTEF there continues to remain uncertainty from turbulent financial markets and a general lack of investor confidence.

He said Government was committed to accelerate private sector investment so as to achieve increased and diversified growth.

Government would, therefore, continue to create a vibrant and enabling environment for both domestic and foreign investment.

On aid policy and management strategy, he said it is expected that the country should reduce on dependence over time.

He said the Government in collaboration with cooperating partners is in the process of developing a new Joint Assistance Strategy for Zambia within the framework of the Paris declaration to succeed the one developed for the FNDP.

He said external borrowing will increase significantly during this MTEF period in order to finance economic infrastructure that is urgently needed across the country.

“The Government expects to contract approximately US$2 billion to support the financing of various infrastructure projects during this MTEF period,” he said.

Development assistance from cooperating partners has been particularly unpredictable over the last two years.

The weaknesses in financial management in the health and road sectors led to the suspension of aid assistance to these sectors and general Budget support.

Mr Ndalamei said however that having achieved economic stability government’s focus over the medium term would be to embark on a bold and ambitious investment and diversification strategy.

And Government has implored ministries, provinces and other spending agencies to measure every Kwacha against the guiding principle of “value for money” in both budget preparation and execution.

[Times of Zambia]

Mr Magande, who is the immediate past Minister of Finance and National Planning, said the economy performed well under his leadership but that now it is weakening after he left office.

He said this during a Zambia National Broadcasting Corporation (ZNBC) television programme ‘Frank Talk’ on Wednesday.

Mr Magande alleged that public service workers are now getting their salaries late and that the Kwacha has constantly been depreciating against major foreign currencies.

Mr Magande alleged that interest rates have continued to be adjusted upwards.
But Dr Musokotwane dismissed Mr Magande’s claims and described them as misleading.

He advised Mr Magande to stop issuing misleading perceptions on the performance of the economy.
“Well, that statement by Mr Magande is not true but of course such statements depend on who is issuing them, and that is if the person was properly trained as an economist.

“If Mr Magande says he is an economist and he is talking like this, then it makes me feel sad because I would have expected such statements from someone from the streets and not a properly trained economist,” Dr Musokotwane said.

He challenged Mr Magande to categorise the programmes he successfully spearheaded during the period he served as Minister of Finance and National Planning.
[pullquote]“If Mr Magande says he is an economist and he is talking like this, then it makes me feel sad because I would have expected such statements from someone from the streets and not a properly trained economist,” Dr Musokotwane said.[/pullquote]
Dr Musokotwane said during Mr Magande’s tenure, the interest rates were high and the Kwacha was equally depreciating.

He said financial institutions are slowly responding to Government’s call to reduce interest rates.

Dr Musotwane challenged Mr Magande to produce evidence to show that the economy is now performing badly.

He said the country’s trade balance of payment is performing better now than when Mr Magande was in office.
Dr Musokotwane said even the Gross Domestic Product (GDP) growth, which is at six percent, is poised to grow further.

“Growth in the economy is important and so when he talks about interest rates, quite rightly they are a little bit higher, but I do not think they were any lower when Mr Magande served as minister.

“The trade balance of payment is performing much better than when he was minister. I didn’t expect him to make those remarks. I’m not saying this because I’m the minister now but any properly trained economist anywhere in the world would not make that statement of the economy going backwards,” he said.

Dr Musokotwane said even independent observers have acknowledged that the Zambian economy is continuously recording growth.

Dr Musokotwane said the International Monetary Fund (IMF) recently praised the country for coming out ‘strong’ after the global economic crisis.
“So maybe he (Magande) must give us an example of what he understands by the economy growing backwards,” Dr Musokotwane said.
[ Zambia Daily Mail ]

AFRICAN Rainbow Minerals (ARM) is set to create about 3,000 jobs at its new mine in the north of Chingola where construction for the production of copper by 2015 has started.

Mines and Minerals Development minister Maxwell Mwale said in an interview in Lusaka that the company would start producing copper in the next five years.

The minister said construction has already started at Konkola North to produce 45,000 tonnes of copper in concentrate in the first phase of the project but this would increase in the second phase to 100,000 tonnes.

And ARM executive chairperson said in a media release on its website that the company was building the new mine in the country with its partner, Vale and described the project as exciting to its diverse commodity portfolio.

The partners had a three-year exploration programme to supply material into that expansion.

The two mining firms were in talks with Mopani Copper Mines, Chambishi Copper Mines and Vedanta Mineral Resources to treat their concentrate.

ARM and Vale spent 18 months studying the copper market and the expectation was for them to grow.

The price of a three-month copper contract on the London Metal Exchange rose 9.75 to 7314,25 a tonne last week.

The reason for the anticipated rapid growth at the new mine was that Anglo American operated Konkola until the late 1950s, when it sunk a 420m-deep shaft there.

ARM and Vale hope to rehabilitate and re-equip the mine, which was forecast to have a life span of 28 years.

[ Times of Zambia ]