NOMSA NKANA, Lusaka
A GLOBAL research firm is confident that Zambia’s external debt is expected to be sustained this year due to limited currency risks and improved fiscal position.
The country’s external debt stood at US$6.7 billion as at September 2016.
Business Monitoring International (BMI) which provides macroeconomic, industry and financial market analysis, forecasts that Zambia’s growth to pick up in 2017, as the economy continues to recover from the collapse in copper prices.
It cites the mining sector and rising domestic demand as some of the factors that will provide tailwinds [growth] to the economy over the year ahead.
BMI also expects inflation in Zambia to remain within the range of single digits throughout 2017 as the effects of El Nino-related drought subside.
“After a gradual hiking cycle in recent years, the easing inflationary pressures coupled with sluggish economic growth will see the Bank of Zambia maintain its key policy rate on hold through end-2017,” the report notes.
BMI is also optimist that Zambia’s fiscal deficit will narrow this year, easing the country’s deficit financing needs.
The targeted overall fiscal deficit is forecast to no more than seven percent of gross domestic product.
The increase in copper price and demand from China which will boost export revenues is also expected to lower Zambia’s current account deficit.
On the spending side, BMI expects Government will pare back on electricity subsidies and restrict new public sector job creation, while higher copper prices and plans to improve tax collection will bolster revenue generation.
However, BMI projects that thermal coal prices will weaken over 2017 due to both stronger coal mine production and weaker demand growth in China.
“Nava Bharat Ventures Ltd, Zambia’s largest coal producer, will be the sector’s key growth driver through the firm’s Maamba project, the country’s largest coal mine.
“Zambia’s coal output will increase to 635,000 tonnes in 2020 from 470,000 tonnes in 2015 primarily; due to a combination of growing output at the Maamba and Collum mines,” the BMI has observed.