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